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Apple Watch Could Be Accessory to Profits

The Apple Watch will help create more stickiness in the iOS ecosystem and help drive repeat sales of high-margin iPhones, writes Morningstar’s Brian Colello.

Mar 10, 2015

Given our view of the Apple Watch as an accessory, rather than a stand-alone device, for the foreseeable future, we’re encouraged by the firm’s previously announced pricing on the Watch Sport at $349 for the 38-millimeter version ($49 more for the 42-millimeter device). Pricing of the regular Watch, with a steel case and sapphire screen, of $549 (38-millimeter) and an effective price of $699 and up for any non-Sport band, could still be palatable to early adopters (versus the gold Watch Edition starting at $10,000) while being lucrative for Apple as the various bands appear to be high-margin add-ons to the device. Apple touted several new apps that will be available for the device, and we anticipate robust innovation and developer support in the years ahead in order to appeal to a broad audience.

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These companies largely earn their competitive advantage from intangible assets, and their stocks are great choices for an investor’s watchlist.

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US Bancorp Earnings: Company Lowers 2024 Guidance for Both Net Interest Income and Expense

US Bancorp Earnings: Company Lowers 2024 Guidance for Both Net Interest Income and Expense

We believe US Bancorp stock remains undervalued.

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What drives these firms’ competitive advantages varies by industry.

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The stock of this narrow-moat company is undervalued by a remarkable 50%.

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PNC Earnings: Expenses Are Well-Managed; Net Interest Income Will Worsen Before Seeing Improvement

We like that PNC is tracking well on its guidance for stable year-over-year growth.

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