Analyst: Apple’s iWatch Means Time for a New Price Target

Source: iWatch Concept by Todd Hamilton

While most tech industry analysts are focused on San Francisco’s Moscone West on Monday in anticipation of Apple’s (NASDAQ:AAPL) Worldwide Developers Conference that starts at 1 p.m. Eastern, other analysts are already looking ahead to the company’s expected new product releases this fall. According to RBC Capital Markets analysts Amit Daryanani and Mark Sue, one of Apple’s upcoming products will likely be the iWatch. In a note to investors obtained by the Financial Post, the RBC analysts raised their price target on Apple shares to $675 from $645 based partly on the potential revenue that an iWatch could generate.

In their report, the analysts said that Apple could generate an additional $9 billion to $11 billion in revenue during the first year if the company sold approximately 50 million devices that cost around $175 to $225 apiece. According to their calculations, this would add about $2.60 to $3.40 to Apple’s earnings per share, or $35 to $45 to Apple’s stock price.

“We think this represents a material opportunity for Apple to leverage its ecosystem and to further deepen iOS usage among its customer base,” the analysts wrote in the research note seen by the Financial Post. “The addition of an iWatch could improve the Apple user experience and integrate customers further into the ecosystem.”

The RBC analysts anticipate that the iWatch will be launched in October or November. This would presumably follow the release of Apple’s iPhone 6, which is widely expected to be available in two larger screen sizes of 4.7 and 5.5 inches.

According to the Financial Post, Daryanani and Sue predicted that the iWatch might include such features as “syncing with iMessage and iCloud, lost iPhone/iPad functionality, proximity passcode unlock, near-field communications for payment, music and maps, and integration with the iPhone for text messages and calls.”

The RBC analysts also think that the iWatch could include sensors to keep track of health data. That prediction aligns with claims made by insider sources cited by 9to5Mac. According to that publication’s sources, Apple’s wearable tech product will likely feature non-invasive medical sensors that will work with an upcoming fitness-tracking and health-monitoring app called “Healthbook.” Healthbook will reportedly manage data in nearly a dozen different categories related to health and is rumored to resemble Apple’s current Passbook app.

Some analysts, such as Piper Jaffray’s Gene Munster, have predicted that Apple might unveil something related to “fitness and vitals” during WWDC. However, don’t expect to see an iWatch at the WWDC on Monday. Most of the rumors that have been circulating about this year’s event have suggested that the iWatch will not make an appearance. Live video of Apple’s WWDC event can be viewed on Apple’s website or streamed over Apple TV beginning at 1 p.m. Eastern.

The RBC analysts’ recent price target hike follows three major price target increases that Apple received on Friday. Wells Fargo analyst Maynard Um raised his “valuation range” on Apple shares to $595 to $640 from a previous range of $515 to $585 while maintaining a “Market Perform” rating. Goldman Sachs raised its price target on Apple to $720 from $635, while Argus raised its price target to $700 from $610, according to MarketWatch. Both Goldman Sachs and Argus also maintained a “Buy” rating on Apple. Apple is currently down about 0.76 percent, at $628.17, ahead of the opening of the WWDC.

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