Shares of Apple's stock may be near all-time highs, but Bernstein analyst Toni Sacconaghi -- typically an Apple skeptic -- said it could go higher.
Sacconaghi hiked his price target on Apple shares to $160 and reiterated his overweight rating on Tuesday, according to FactSet. That's about 14 percent over Apple's $140.50 price on Tuesday, just shy its all-time intraday high.
"We think the iPhone 8 cycle will be significant," Sacconaghi said on CNBC's "Fast Money: Halftime Report."
"We believe that users have been holding off — that the last two products have been relatively incremental and evolutionary, and that the iPhone 8 will be a significant form factor change."
Sacconaghi has said Apple's best days are behind it, and that it's unclear whether it will be a growth company in five years. But on Tuesday, Sacconaghi said Apple's stock is relatively cheap by some of Wall Street's measures.
Plus, he added, Apple is poised to benefit "significantly" from potential changes in the laws for bringing back foreign cash. Though Apple has long had a mountain of cash on hand, investors now see it as more valuable, Sacconaghi said.
"Apple might use repatriated cash to do a large buyback," Sacconaghi said. "I think Apple's instinct would be to bring it all back."
Apple announced a new app, Clips, on Tuesday, that offers video filters similar to Instagram and Snapchat. While Snapchat plays in augmented reality, Apple's revenue opportunity in AR may look more like "Pokemon Go," Sacconaghi said.
"I certainly see it as an opportunity. I don't know if it is ultimately Apple's biggest opportunity," Sacconaghi said. "But what we could have with augmented reality is much more significant and immersive experiences, particularly in gaming. And what we've seen from Apple is the dominant driver of App Store growth — which has been significant and has very high margins — has been in gaming."
Still, Sacconaghi said Apple will need to continue adding new products to remain relevant. Despite raising his price target, Sacconaghi knocked 10 cents off his estimates for the March quarter, according to FactSet.
"Anything that increases the utility of a device, or can create the need for an upgrade, is positive for Apple," Sacconaghi said. "But longer term, I think Apple's fortunes are really going to be predicated on its ability to deliver products and services beyond the current portfolio."