Apple Inc.’s AAPL price target was increased on Thursday by two investment banks. RBC Capital Markets’ analyst Amit Daryanani upped his price target from $120 to $125 and reiterated an outperform rating. Likewise, Nomura analyst Jeffery Kvaal increased his price target from $120 to $135 while maintaining a buy rating.

Why the Increase in Price Target

RBC’s confidence in Apple is backed by a survey that it conducted on over 6000 consumers.  According to Daryanani, the survey results indicate stronger demand for iPhone 7 and enhancements to the company’s gross profit margin and average selling prices.

Kvaal, on the other hand, noted that the increasing popularity of the phone across geographies indicates stronger-than-expected demand. "We believe the supply chain is preparing for upward revisions to production forecasts," Kvaal mentioned in his research report.

Apple is up 5.8% from Sep 7, the day iPhone 7 was launched, to date.

APPLE INC Price

APPLE INC Price | APPLE INC Quote

Our Take

We believe that Apple’s fortunes are tied to its most important offering, iPhone, at least for the near term. iPhone 7 and iPhone 7 Plus handsets are proving to be significantly better than their predecessors. The new devices feature a bigger and a sharper screen (Retina HD Display), water-resistant design, a better camera (the Plus version comes with an advanced dual camera), a faster processor (with A10 Fusion Chip that is claimed to be twice speedier than that in iPhone 6), a much advanced audio system (stereo speakers, AirPods) and promise improved connectivity, battery life and storage.

Considering the upgrade cycle trends, the company seems well placed to gain, especially in mature markets. Since the release of iPhone 6 in Sep 2014, Apple leveled with and even pulled ahead of major phablet makers like Samsung, HTC and LG. To further push its advantage, the new iPhones were made available in more than 130 countries, representing the fastest rollout in the history of iPhones.

Zacks Rank and Stocks to Consider

Currently, Apple is a Zacks Rank #3 (Hold) company. Better-ranked stocks in the broader technology sector include Facebook, Inc. FB,  LinkedIn Corporation LNKD and Yirendai Ltd. YRD, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

For the current year, Facebook has seen eight upward revisions over the last 60 days. None of the estimates were revised downward.

For the same timeframe, LinkedIn witnessed three positive estimate revision and no negative estimate revision.

One estimate for Yirendai moved north over the last 60 days while none moved south.

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