Morgan Stanley Includes iWatch In Model For First Time; Raises Price Target

Early Monday morning, Morgan Stanley analyst, Katy Huberty issued a research note in which she included Apple's AAPL iWatch in her model for the first time. This drove her to maintain an Overweight rating and raise her price target from $99 to $110.

"We see a range of 30-60M iWatch unit sales in the first 12 months of availability based on historical penetration of past iDevice," said Huberty, before adding that her estimate includes an average price of $300 with margins in the 40 to 50 percent range.

In addition to the iWatch, Huberty is expecting Apple's June quarter results to be at the high end of guidance, based on upside demand for the iPhone indicated by her Alphawise smartphone tracker. She has model in 36 million units for the June quarter, which is three million below what the Alphawise data indicated.

Huberty noted that, since the company changed its guidance philosophy five quarters ago, Apple has beat the high end of its revenue guidance range three out of five times and gross margin four out of five times. Taking this into consideration, Huberty has raised her estimates for revenue, gross margin and EPS to $37.9 billion, 37.9 percent, and $1.24, respectively.

Apple shares were up ~0.85 percent in the pre-market following the release of the note.