Apple is getting ready to release its newest product, the Apple Watch, and Deutsche Bank analyst Sherri Scribner thinks it's going to be big, but not big enough.
The watch's sales might total $26 billion a year by 2018, she wrote in a commentary obtained by MarketWatch
But that doesn't make her bullish on the company's stock. Scribner has a hold rating, and her target price of $110 represents a 13 percent drop from Thursday's level of $126.
The iPhone accounted for 69 percent of Apple's revenue in the latest quarter, meaning there are "limited catalysts" to push the stock price, Scribner said.
So while she expects Apple to beat its competitors on smart watch sales this year, she doesn't see that doing much for the share price.
Scribner predicts that watch sales will at most make up 10 percent of total revenue and earnings per share by 2018. Apple's revenue totaled $200 billion in the latest 12-month period.
Most analysts are more bullish than Scribner, with an average price target is $134.92, according to FactSet. And some experts see a market capitalization of $1 trillion for Apple as the next market milestone.
The company's stock made a lot of hay last month by surpassing $700 billion. And its market cap now stands at $738 billion. So a move to $1 trillion, assuming the share count doesn't change, would entail a 36 percent price increase for the stock — to $172.
Of course, that could take a while, given that the market as a whole historically returns only about 9 percent a year. But Apple has generated an annual return of 19.6 percent during the last three years.
Analysts' consensus 18-month target for the stock is $136.08, according to S&P Capital IQ.
Apple's a "dynamo," thanks to its business model of controlling its hardware while leaving software open, UBS analyst Steven Milunovich wrote in a note to clients, obtained by USA Today
. He has a $150 price target for the shares.
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