CLSA Upgrades Apple on Back of Q2 Results

On Thursday, CLSA upgraded shares of Apple (NASDAQ: AAPL) from Outperform to Buy and raised the price target from $610 to $695.

Analyst Avi Silver's upgrade is based on:

• Earnings momentum poised to accelerate as users upgrade to iPhone 6.
• The analyst is forecasting mid-teens EPS growth over the next 3 quarters.
• ”Near-term earnings risk is low as an expanded iPhone lineup mitigates iPhone 6 anticipating risk,” said Silver.
• An additional $4-5 per share could be provided by iWatch.
• Upside from an expanded services platform.

From the Apple conference call, one of the most interesting data points was “over 50% of iPhone activations in the last six months were new users,” according to Silver.

Silver feels Apple can “reclaim” smartphone market share in Europe and Asia when the company rolls out a larger-screen iPhone later this year, and possibly in 2015.

Shares of Apple are up 7.7 percent to $565.30 in Thursday's trading fueled by a massive second quarter earnings beat, stock split, dividend increase and increased buyback.