Top Street Analyst Asks: Why Do We Need The Apple Watch?

In a report rolled out Tuesday, UBS analysts Steven Milunovich and Peter Christiansen commented on Apple Inc.'s AAPL March 9 "Spring Forward" Event, saying the meeting didn't settle the question of why would consumers need the Apple Watch.

"Although management again highlighted various applications, most emphasize improved convenience over pulling the phone out —there still is not a sense of a killer app. Cook has said the breadth would surprise consumers, and perhaps that is sufficient." However, the analysts were disappointed with the fact that none of the company's new "fashion" executives presented.

Moreover, UBS' checks suggest that the watch production may be lagging. The analysts believe "the recent yield rate has been only 75% and that there has been a labor shortage after Chinese New Year at Quanta, forcing Apple to reach out to Hon Hai for help."

They forecast six million units to be sold in the June quarter, "which might be at risk," and 10 million to be sold in each of the subsequent quarters. For fiscal 2016, they project unit sales of $16 million, for an additional $0.15 per share, and 40 million units in fiscal 2016 contributing $0.70 to EPS.

Despite doubts about the Watch, the analysts still rate Apple's stock as a Buy, and maintained a $150 price target, mainly driven by iPhone sales.