JP Morgan determines that 5 percent of iPhone owners will buy Apple Watch

Apple Watch in wild Race Johnson 001

A study released Wednesday by investment firm J.P. Morgan bodes well for Apple’s inaugural wrist-worn gadget. Although the Apple Watch requires an iPhone and is limited to owners of the iPhone 5 and newer, JP Morgan thinks there will be 400 million potential Apple Watch customers by the end of the March quarter, with five percent of compatible iPhone owners potentially buying it before the end of 2015.

JP Morgan’s Rod Hall wrote in a note to investors that 95 percent of first year Apple Watch buyers will opt for the entry-level Sport edition, priced at $345, translating into a profit margin for Apple of 39 percent.

Apple could sell 26.3 million Watches in calendar 2015.

“But if the stainless steel version of the Apple Watch or the gold “Edition” model prove more popular than Hall expects, he admitted his margin projections could prove conservative,” reads the article.

JP Morgan Apple Watch shipment estimates

The projected financial impact of the Apple Watch will help push shares of Apple to $145 before the end of the year, leading JP Morgan to increase is fiscal year 2015 earnings per share forecast by 2.4 percent to $9.21.

Next year, Watch penetration should reach 13 percent of compatible iPhone users.

Based on Apple’s record-setting quarterly profits and the anticipation surrounding April’s Watch launch, shares of AAPL closed at $122.02 yesterday giving the company a whopping $700 billion valuation, or more than twice the market capitalization of Microsoft.

Based on AAPL performance today, Apple is now a $722 billion company.

Source: AppleInsider