Even Lowball Sales Estimates for Apple’s iWatch Are Impressive

Source: iWatch Concept by Todd Hamilton

Although Apple (NASDAQ:AAPL) hasn’t yet confirmed the existence of its long-rumored iWatch, analysts are continuing to offer their best guesses on what an iOS-powered wrist-worn device could add to the company’s bottom line. BMO Capital Markets’ Keith Bachman is the latest analyst to weigh in with his opinion on Apple’s expected wearable tech product.

In a research note to investors obtained by Apple Insider, Bachman offered three different scenarios based on three different percentage rates of penetration among Apple’s estimated iPhone user base of 335 million. Many analysts are using the iPhone user base as a starting point because it is widely believed that Apple’s iWatch will primarily operate as an accessory device to the iPhone.

For his low end estimate, Bachman assumed that at least 10 percent of iPhone users would purchase an iWatch with an average selling price of $250. This level of penetration would allow Apple to sell around 33.5 million iWatch units in calendar year 2015. If 15 percent of the installed base of iPhone users bought an iWatch, Apple would sell nearly 50.3 million iWatch units. At the high end of the spectrum, Apple could sell as many as 67 million units if 20 percent of iPhone owners purchased the iWatch.

Assuming a gross margin of 25 percent on the iWatch, Bachman’s low end sales estimate of 33.5 million units would add 3.1 percent to Apple’s earnings per share in calendar year 2015. Sales of 50.3 million units would add 4.6 percent to EPS in 2015, while the high end estimate of 67 million units would add 6.2 percent to Apple’s EPS next year. As noted by Apple Insider, BMO Capital Markets is bullish on Apple with an “Outperform” rating and a $98 price target.