Apple Inc Gears Toward an All-time High on iWatch and iPhone Loyalty

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By Athena Yenko | July 15, 2014 12:24 PM EST

Morgan Stanley ups its price target of Apple Inc. shares from $99 to $110 and gives investors a valuation range from a bull-case high end of $132 per share, to a bear case of $74. If this estimate comes into fruition, shares of Apple will reach an all-time high.

REUTERS
The Apple logo is pictured at a retail store in the Marina neighborhood in San Francisco, California April 23, 2014.

Analyst Katy Huberty is vouching on Apple's rumoured iWatch as the major catalyst for the stock. She said that investors should focus on Apple's capacity to market a new product with its magnitude of loyal followers and not how smartwatches from competition failed in the market. Such behaviour were seen when investors compared iPod to Sony Walkman, the iPhone to BlackBerry and the iPad to netbooks but a new Apple product had always prevailed over these in comparison.

The "halo effect", first seen when iPod customers shift from Window PCs to Apple's Mac, will also happen with the iWatch, Huberty wrote in a note to investor obtained by AppleInsider.

She said that brand loyalty for the iPhone had increased overtime from 73 per cent in December 2011 to 90 per cent in March 2014 and this shall translate to the iWatch.

The iWatch will bring strong sales in just a matter of 12 months after its roll out, Huberty predicts. She is seeing a range of 30 million to 60 million units being moved at an average price of $300 - this shall bring Apple gross margins between 40 to 50 per cent.

Meanwhile, Apple's Mac platform enjoyed a vast growth in the emerging market - Greater China, Asia Pacific, Europe, the Middle East and Africa (EMEA) and Latin America.

EMEA brought 20 per cent increase while Latin America is bringing 25 per cent growth year-over-year.

According to Needham & Co. analyst Charlie Wolf's note to investors, the June quarter shall reveal if a disparity between developed and developing regions exists.

"We can see no obvious explanation for the disparity. It could be a one-quarter blip, which only the data for June will reveal. Or it could represent an inflection point in the Mac's fortunes. Only time will tell, " Wolf wrote.

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(Photo: REUTERS / Robert Galbraith)
The Apple logo is pictured at a retail store in the Marina neighborhood in San Francisco, California April 23, 2014.
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