UPDATE: UBS Upgrades Apple

In a report released Monday, UBS analyst Steven Milunovich upgraded Apple AAPL and increased its price target from $100 to $115.

Analysts at UBS have high expectations for Apple's gross margins in both the near-term and the intermediate-term. UBS increased Apple's margin forecast from 36.6 percent to 38.1 percent.

Milunovich claimed high margin expectations are based on increase deferred revenue with a decrease in warranty expense, fixed cost priced in from when iPhone 5 was introduced, very little gross margin deterioration with the iPhone and expectations for iWatch gross margins of 40 percent.

The $115 price target is based on a 2015 PE multiple of 15x (12x excluding $25 cash per share).