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New products, 'innovative services' lead Barclays to hike Apple price target by 17% to $140

The New York Stock Exchange, credit Carlos Delgado via Wikipedia.

British banking giant Barclays this week raised its price target for Apple shares to $140 from $120, saying that increased customer demand for larger-screened iPhones and iPads, the introduction of the Apple Watch, and the unveiling of new services like Apple Pay could significantly expand the company's margins.

Barclays analyst Ben A. Reitzes made the change in a note to investors, a copy of which was provided to AppleInsider. Reitzes believes that Apple's share price is strongly correlated to its margins, and sees the new releases increasing those margins going forward.

Specifically, Reitzes feels that current margin estimates fail to properly account for the record-setting sales pace of the iPhone 6 series. The iPhone 6 was the top seller at each of the big four U.S. carriers in November, while the iPhone 6 Plus swept second place.

In addition, he sees the Apple Watch as a "high-margin" device, though it is unclear whether that is based on the announced pricing for the Sport model or on projections for the cost of the Apple Watch and Apple Watch Edition versions. Expectations for Apple Watch sales run the gamut from bearish to bullish, though Swiss bank UBS recently predicted that the Cupertino company could move as many as 24 million of the devices in fiscal 2015.

Finally, Reitzes cited Apple Pay and other "soon to be announced" digital services as sources of relatively low-overhead recurring revenue that would boost margins. Those other services are not named, but could include the rumored rebranding of Beats Music that is expected to come alongside a significant price cut for the streaming service.