Goldman Sachs Says Apple's Risk-Reward 'More Balanced,' But Upside 'Persists'

In a report published Thursday, Goldman Sachs analyst Bill Shope commented that Apple Inc.'s AAPL risk-reward profile is "more balanced," but recent data points support further upside.

Shope noted that shares of Apple have appreciated 20 percent versus a 6 percent increase in the S&P 500 since his last report on December 16. The analyst added that recent data points have changed key assumptions since then.

Shope explained that iPhone units posted a 12 percent upside to his prior bull case unit scenario, earnings per share exceeded expectations by 8 percent and operating cash flow exceeded expectations by 31 percent. In addition, the company's CEO Tim Cook delivered a presentation at the Goldman Sachs Technology and Internet Conference that "increased our confidence" in Apple's platform momentum, the potential for the Apple Watch, and prospects for sustained iPhone growth.

"All of these factors and a powerful near-term catalyst set (April Watch launch) lead us to increase our estimates and price target," Shope wrote. "Our scenario analysis reflects our increasingly bullish outlook, though the risk-reward has become somewhat less favorable."

The analyst changed his fiscal 2015 earnings per share estimate to $8.77 from $8.51, 2016 earnings per share estimate to $10.45 from $9.87 and 2017 earnings per share estimate of $11.56 from $10.84.

Shares remain Buy rated with a price target raised to $145 from a previous $130.