JP Morgan's Top Telecom & Networking Equipment Stock Picks For 2015

In a recent report, JP Morgan analysts gave their take on the 2015 outlook for telecom and networking equipment/IT hardware. Analysts made predictions on a wide range of topics from the smartphone deceleration to the impact of the Apple Watch.

PC/Tablet Forecast

Analysts expect a strong start to 2015 when it comes to PC shipments. However, they expect tablet growth to begin to flatten this year. The report notes that this forecast would be significantly impacted if Apple Inc. AAPL were to launch its iAnywhere platform this year.

Apple Watch

The report predicts a launch of the Apple Watch to come in 1Q15. Analysts are predicting 25.6 million shipments for the year with a 30 percent EBIT margin. If these numbers are accurate, the Apple Watch could provide a 4.3 percent boost to Apple's 2015 earnings.

100G Optical

Analysts are predicting Verizon Communications Inc. VZ will announce a rollout of metro 100G service in 1Q15. Analysts estimate that total WDM revenues grew by 5 percent in 2014. That overall growth number is based on a breakdown that includes a 68 percent increase in 100G revenues, a 38 percent decline in 40G revenues and a 12.3 percent decline in revenue for 10G and lower.

Telecom Capex Tightening

Analysts expect the lowest capex for the telecom industry since 2009. Not surprisingly, they also predict the lowest revenues for the industry since 2009.

Smartphone Saturation Continues

Analysts see growth in smartphone shipments continuing to slow over the next two years. “We are currently forecasting Smartphone shipments to grow 12.3 percent Y/Y in 2015 and 9.6 percent Y/Y in 2016.”