Apple Gets Price Target Boost on Back of Strong iPhone Demand

NEW YORK (TheStreet) -- Consumers have taken to Apple's (AAPL) iPhone in droves since it was released in September, but demand may be stronger than some on Wall Street were expecting. Couple iPhone demand with the potential that the Apple Watch will surprise to the upside, and 2015 could be a banner year for the world's largest company. 

Bank of America Merrill Lynch analyst Wamsi Mohan sees is that way after he boosted his price target on the stock to $130 on the back of raising iPhone estimates in fiscal 2015 to 200 million, up from 195 million, because of strong demand for both the iPhone 6 and iPhone 6 Plus.

"Our checks, including our recently published survey of 400 U.S. buyers, indicates stronger demand for iPhone 6 (vs. 6 plus, which could be a U.S. buyer preference), and for the 64GB storage option vs. the 16GB or 128GB," Mohan wrote in a note. "We slightly increase the mix of iPhone 6 in F15 (55% of total iPhones vs. prior 54%) with the remaining units allocated between the 6 plus (28%), 5S (6%), 5C (9%) and future model (3%)."

In addition to strengthening demand for the new iPhones, of which Apple sold more than 10 million in the first weekend it was available, Mohan believes the Apple Watch could sell many more units than Wall Street is expecting.

Mohan estimated that Apple will sell 22.9 million Watch units in calendar year 2015 and 38.5 million in calendar year 2016, noting that 10% of respondents in a previous survey said they would be willing to buy the watch, and 33% of those who said yes would be willing to pay up to $500.

The price target hike comes on back of another price target raise from Barclays Capital, which boosted its price target to $140 on back of potentially stronger-than-expected gross margins.

Apple shares were lower in early Tuesday trading, falling 0.54% to $114.45.

-- Written by Chris Ciaccia in New York

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