UPDATE: Barclays Raises Apple Price Target

On Monday, analysts at Barclays raised the price target on shares of Apple Inc. AAPL from $120 to $140 and maintained the Overweight rating.

Ben Reitzes finds that Apple’s iPhone upside into the next calendar year is promising: “In fact, our checks over the last 3 months and within the supply chain only augment our bullish views around the iPhone cycle that we articulated in July.”

Reitzes also feels that improving gross margins will offer upside to share price.

“We believe shares are very correlated to the movement of gross margin since it provides inflection points on the bottom line...We believe margins are set to continue to move up appreciably over the next few quarters, and our estimates for FY16 and FY17 could even be conservative given fundamental product mix shifts with new products.”

Lastly, Reitzes declared, “As Apple enhances its business model with Apple Pay, a real margin expansion story and strong leadership - we believe its multiple will continue to close the gap with Google.”

Shares of Apple recently traded at $118.60, down 0.28 percent.