RBC Analyst: 'Gross Margins Could Keep Moving Higher For Apple'

The pre-order sales of Apple Watch has been a success for Apple Inc. AAPL with the device getting sold out within minutes of it becoming available. RBC Capital Markets' Amit Daryanani was on CNBC recently to explain what the reviews and pre-order sales of Apple Watch are signalling and his outlook on Apple’s stock.

A Healthy Backlog

“I think initially what you want to show obviously on the reviewers’ end you want to understand what the implications for this [will] be, not just for the gen 1 product, but broadly longer term,” Daryanani said. “And I think most of the reviews suggest it’s one of the best first gen watches you have seen out there and the potential is immense as you go further. [And so] I think from a review basis this is pretty good for Apple investors.”

He continued, “The Apple Watch seems to be sold out across the board right now with 4 to 6 week delays as early as I think 10 minutes since the pre-order started. So, I am not sure what to make of it yet, it’s either a sign of demand is really good or supply is really constrained, but looks like they have a healthy backlog building already.”

Good Catalysts

Daryanani was asked for his outlook on Apple’s stock. He replied, “We like the stock, we have an Outperform on it. We think it continues to grind higher $140-$145 seems to be the target for us and I think you have a lot of good catalysts stacking up from a really good March print, capital allocation update which I think will surprise people and the third thing that’s less talked about I think gross margins could keep moving higher for Apple and provide a really good buffer as you get to the back-half when compares get difficult.”