Citi Positive On Apple Due To iPhone 7 Plus, Wireless Accessories Margins

Last week, Apple Inc. AAPL announced new versions of its iPhone and Apple Watch, with features pretty much in line with expectations.

Analysts at Citi were surprised with the iPhone 7 Plus retail price of $20 more than its predecessor, and the release of the AirPods, a suite of wireless headsets on sale starting at $159. The firm released an update to their original note, of which a recap can be read here.

Jim Suva and Asiya Merchant believe investors will receive these surprises with joy, as higher than expected gross margins for the iPhone 7 Plus and wireless accessories will "help to offset the higher BOM."

Given the recent developments related to the new iPhone 7, Apple Watch, and wireless accessories, and the arrival of Nintendo Co., Ltd (ADR) NTDOY games like Super Mario and Pokemon Go to the iPhone and Apple Watch, Citi reiterated a Buy rating on shares of Apple.

The firm maintained a $120 price target on the stock, keeping tempered expectations for the iPhone 7, "with September/December iPhone consensus units -8%/-1% y/y growth with OLED phones in 2018 likely to spur further upgrades by the install base."

Shares of Apple traded recently at $105.42, up 2.2 percent on the day.