Analyst: Greater Apple Watch Interest Means Greater iPhone Sales

On news that Apple Watch is polling most strongly among Chinese customers, the market-watchers at UBS continue to push and pull themselves apart as they try to understand — and so predict — the new wearable’s sales potential and impact. The firm previously downgraded their estimate of year-end unit sales from 41 million to 31 million, calling that latter figure proof that consumer response to Apple Watch is “tepid.” (Even more proof of that, of course, is that their children “aren’t whining” for the thing.)

But now UBS sees the light, an CNBC reports:

[UBS] sees China playing a major role in driving sales for the new device.

The insight comes from a new research note based on a UBS survey of 9,000 consumers in six countries released on Monday.
“It’s finding that Apple continues to be extremely strong, the stickiness is very clear, and it’s China, China, China,” Steve Milunovich told “Squawk on the Street.” “We’re finding that Apple’s retention rate is very strong in China, and we’re also finding that actually Apple Watch interest is highest in China relative to the other five countries that we surveyed.”

So, with all that high Apple Watch interest, you’d think UBS would upgrade their astronomically high (yet somehow low, apparently) sales estimates for the device. But they’re not. Instead, they’re saying more Apple Watch interest will lead to more iPhone sales, so they’ve upped their estimate of the latter by some five million units to 48 million overall, boosting iPhone’s numbers in an upgrade cycle off-year. While I agree wholeheartedly with that reasoning (and because it seems clear that iPhone sales and retention rates are Apple’s primary goals for Apple Watch), I also like to think that increased Apple Watch interest would also yield increased Apple Watch sales.

For what its worth, UBS reckons on an Apple stock target price of $150 per share (today’s actual price is roughly $129 per), which means they’re likely closer to reality than, say, Carl Icahn’s mark of $240.

Market analysis: It’s a good gig if you can get it.

[Image via CNBC]