Apple Inc. (NASDAQ: AAPL) received another favorable analyst call from Credit Suisse’s Kulbinder Garcha in the week following its most recent earnings report. As you might have read Apple had a record-setting first quarter that resulted in an overflow of analyst calls the following day. Credit Suisse initially weighed in at that time with a $130 price target, but now the firm sees even more of an upside.

Credit Suisse maintained an Outperform rating for Apple and raised its price target to $140 from a prior $130, implying upside of 17% from Wednesday’s close. The key here is that this takes Apple’s target well above the consensus. The highest listed analyst price target was from Cantor Fitzgerald at $160, which implies a very optimistic upside of 34%.

24/7 Wall St. offered an outlook on Apple’s all-time high on Wednesday, and included what other analysts are saying for Apple’s outlook as well as the company given guidance. This new Credit Suisse report only sets even higher expectations for Tim Cook and his team at Apple. This is not the first such increased expectation, which means it may not be the last one we see either.

ALSO READ: Running a Tesla With an Apple Watch

Credit Suisse conducted a detailed analysis, based on recent commentary from Apple’s management, and concluded that Apple likely has over 400 million iPhone users. Along with this, Apple has a superior ecosystem, compute advantage and quickening replacement rate. As a result, the firm concluded that its already above-consensus earnings per share (EPS) projections of $9.25 for calendar year 2015 and $10.04 for calendar year 2016 may be conservative.

However, the estimate of 400 million iPhone users could be conservative as well, and the real number could be nearly as high as 490 million. Credit Suisse assumes that replacement rates will expand following 2015 as gross additions decline, yet again this is considered on the conservative side.

Garcha sees three levers for the expectation of much higher upside:

• Gross margins at 40% at the corporate level could prove conservative, as the firm does not take into account leverage from increased sales nor scope for expansion as cost curves on new products improve.
• The firm only assumes 20 million Apple Watches at an average sale price of $400 and gross margin of 50% in 2015, which could be on the low side.
• Credit Suisse assumes no significant impact from new products or the monetization of services, such as Apple Pay, Beats, HealthKit and HomeKit.

Apple Shares were relatively flat at $119.71 in the first half of Thursday’s trading session. The stock has a consensus analyst price target of $130.49 and a 52-week trading range of $72.54 to $120.51.

ALSO READ: Credit Suisse’s Top Picks for 2015 With Huge Upside

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.