Barclays gives Apple a rating of Overweight, with a target price of $110

Barclays recently released its research report, covering Apple Inc. (NASDAQ:AAPL)’s shares. Analysts at Barclays changed Apple Inc. (NASDAQ:AAPL)’s status to Overweight from a previously given rating of Equal Weight. The report also set a new target price for Apple, $110, which shows a potential increase of 16% in Apple’s stocks. Ben Reitzes, an analyst at Barclays, said that the credit for this increase in Apple’s ratings goes to the CEO of Apple, Tim Cook, who, through his policies and strategies, gained the confidence of the shareholders back. The company not only made advancements in the technological field but, it also remained successful in neutralizing the treats that the company was facing previously. The ratings of Apple were never downgraded for a period that exceeds almost a decade. However, Barclays had to downgrade Apple’s ratings to Equal Weight, in the last February, because of the inability of the company to launch a revolutionary product in the market, especially when the smartphone market was expanding and other company’s were introducing their smartphones in the market.

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Moreover, Reitzes disclosed that Apple’s ratings were increased partially because of the weaknesses of Samsung Electronics Limited (SSNLF). It is the weakness of Samsung that gives Apple opportunities to seize market and gain share, both in the long term as well as the short term. Since Samsung’s financial reports for the second quarter of 2014 were not up to the mark, iphone is gaining popularity again; and Apple stocks are moving up.

Coming to the wearable products of Apple, Apple’s smartwatches, iWatches, are likely to be launched in the latter part of the year. According to Reitzes, estimates show that the company will be able to sell at least 50 million iWatches this year alone, thus adding about $4 to the Annual EPS of the company (Earnings Per Share).

As for the company’s revenues for the second quarter of 2014, Reitzes predicts that the company will report total revenues of $38.33 billion through sales. Moreover, the EPS for June-quarter is estimated to be around $1.24. As for the fiscal year 2014, the analyst estimates an EPS of $6.36 and total revenues of $183.4 billion. Moreover, Reitzes says that company will be able to sell at least 61.5 million units of iPhone during the first quarter of the year 2015.

Where the analyst at Barclays was very optimist about Apple’s future, he did express some concerns over the lack of company’s visibility in the areas of Web services. He further mentioned that the decline in subsidies is also not good for the company’s growth; China’s biggest web carries were recently asked to slash advertisement expenses and subsidies on all the big phone companies including Apple. The analyst firm is of the view that Apple will face competition by the domestic companies in the near future. It is pertinent to note here that Apple is already facing competition by a Chinese company over the rights of personal Intelligence Assistant in China. Such competitions can cut back Apple’s margins. However, Apple is trying to monetize its user base of iTunes and App store, which can improve the company’s stocks further.