Apple’s (AAPL) share price has taken a huge hit over the past few months as analysts did their best to call Apple’s future prospects into question. No one is arguing that Apple will continue to grow in the near future, but the explosive growth the company has enjoyed for the past few years is likely to slow and the huge margins it has achieved thanks in large part to the iPhone may continue to shrink. By expanding into new territory, however, one industry watcher thinks Apple is about to open new doors that may help reverse the Street’s soured sentiment.
Morgan Stanley analyst Katy Huberty wrote in a note to investors on Tuesday that two rumored products Apple is reportedly working on could amount to big business for the Cupertino, California-based company moving forward.
Huberty put pen to paper and looked at the possibilities for Apple’s wearable iOS-powered “iWatch,” which the Times and Journal both recently reported is currently in development. Assuming sales that grow to roughly 50 million units per year, the analyst sees an Apple smart watch generating between $10 billion and $15 billion in annual revenue that will yield between $2.50 and $4.00 in yearly profit per share.
Apple’s much rumored HDTV is said to be launching this year or next year, and Huberty says that with an average selling price of $1,300, Apple’s smart TV could ultimately pull in as much as $68 billion in annual revenue following a global launch if 10% of Apple’s current iTunes user base purchases the device. Performance in line with the analyst’s estimates would add approximately $18.00 per share to Apple’s annual earnings.
Huberty maintained her Overweight rating on Apple shares with a $630 price target.