BMO Trims Apple Watch Estimates, Boosts iPhone View

In a report published Friday, BMO Capital analyst Keith Bachman maintained an Outperform rating and price target of $145 on

, while raising the iPhone estimates and lowering the Apple Watch estimates. For FY2016, the iPhone estimate was raised by 3.5 million to 233 million units, while the Apple Watch estimate was lowered by 3 million to 27.5 million units. The iPhone estimate for the June 2015 quarter was also raised. "We believe the iPhone installed base will be well over 500 million by the end of CY2015. Therefore, we believe that upgrades should contribute about two-thirds of iPhone shipments in CY2016," Bachman elaborated. The analyst believes that the company would need to generate about a third of the iPhone users as new users to be able to meet the CY2016 estimate, with a large number coming from the emerging markets or converts in existing markets. In addition, the analyst believes that the iPhone installed base would reach 500 million by the end of 2015. This means that upgrades would account for two-thirds of the iPhone units sold in CY2016. "[W]e think ongoing growth in iPhones, and aggressive capital allocation, can push the shares higher," Bachman added.