Barclays Raises Apple Share Price Target, Says Margin Estimates Are Conservative

Barclays Capital on Monday raised its price target on Apple Inc. stock to $140 from $120 and said consensus estimates for gross margins look conservative. Analysts said the mix shift within the iPhone and iPad toward bigger screens, along with the coming introduction of the high-margin Apple Watch and other services, has not been factored into estimates. "We believe the multiple should expand further along with higher revenues from recurring services revenue streams, which carry favorable incremental margins," they wrote in a note to investors. "With the potential to deliver iPhone upside with new recurring services (payments & soon to be announced services), ongoing share repurchases and a healthy dividend, we believe this multiple is conservative in today's market conditions." Apple shares were down 3% in morning trade, but have gained 44% in the year so far, while the S&P 500 has gained just 12%.