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Morgan Stanley bullish about Apple Watch prospects

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Morgan Stanley expects 30 million Apple Watches sold this year

Morgan Stanley (MS) published an investor note in November last year, suggesting that investors are underestimating the demand for Apple Watch, just like they did when iPhone and iPad were launched. The note predicts that Apple (AAPL) could sell about 30 million of its Apple Watches in 2015.

Morgan Stanley rationalizes that if only 10% of the 300 million people who carry iPhones buy an Apple Watch, the company could easily sell 30 million units this year. To put the estimate in perspective, iPhone managed to penetrate 7% of Apple’s installed base when it launched. For its part, iPad penetrated 14% of the base.

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And, according to Morgan Stanley, iPhone’s low penetration rate can be blamed on carrier constraint and a high-priced two-year contract. iPhone indeed faced carrier constraint. It was only available with the AT&T (T) network for about four years following its launch in 2007. For more on this topic, read Why Apple’s iPhone is still the leading smartphone brand at AT&T.

Consumer interest for Apple Watch still high 

Morgan Stanley expects wearables to be the most quickly adopted consumer device to date. Within this fast-growing market, Morgan Stanley expects Apple to garner the most interest from consumers when it launches its Apple Watch. According to the AlphaWise survey, and as the chart above shows, Apple, Sony (SNE), Google (GOOG)(GOOGL), Microsoft (MSFT), and Nike (NKE) are the top five companies for which consumers show the most interest.

Morgan Stanley analyst Katy Huberty is now setting a price target of $126 for Apple shares, and a “bull-case” target price of $150.

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