Bank of America has a list of reasons why Apple can continue to rally

Published Wed, Jan 29 20209:52 AM ESTUpdated Wed, Jan 29 20204:04 PM EST

(This story is for CNBC PRO subscribers only.) Apple easily topped analyst estimates for the first quarter , and Bank of America believes there are a number of upside catalysts ahead that will push shares even higher. On Wednesday, in a post-earnings note to clients, the firm reiterated its buy rating on the stock, and raised its price target to $350, which is about 10% above where shares closed Tuesday. Analyst Wamsi Mohan said a number of factors support his bull case on the stock, including demand in the company's hardware division, as well as "strong" gross margins and a "solid" balance sheet. For the first quarter, the tech giant reported earnings per share of $4.99, compared to estimates of $4.55, according numbers compiled by Refinitiv. Revenue came in at a record $91.8 billion, which was ahead of the Street consensus of $88.50 billion. Revenue from iPhone sales grew 8% to $55.96 billion, which Mohan said was strong. Sales from the company's iPhone division is a closely watched metric not least because some Apple skeptics have periodically pointed to "peak iPhone" as a concern for the company going forward. Mohan noted that the phone's inventory levels remain low to normal, and that elsewhere in the hardware landscape "demand for wearables exceeds supply." In the first quarter, Apple returned $25 billion to shareholders, part of which was through buying back $20 billion worth of shares. Mohan said that in the next quarter he expects "a new buyback authorization and an increase to the quarterly dividend." Apple's services business has been a key area of growth for the company, and while revenue grew 17% in the first quarter, it was short of analyst estimates. But Mohan said this could be attributed to factors like disruption from the Hong Kong protests, as well as "overestimating deferred revenue from TV+." Additionally, he noted that growing iPhone sales will also lift the company's services segment. "The iPhone installed base is growing and significant penetration of Services usage is still to be realized with Apple tracking to 600mn subscriptions vs prior 500mn exiting 2020," he said. Looking ahead to the next quarter, the company gave a wider-than-usual range for revenue guidance due to uncertainty surrounding the impact of the coronavirus outbreak, which Mohan said "de-risks" the potential impact. Shares of Apple hit a new all-time intraday high of $327.85, and ended the session with a gain of 2.09%. - CNBC's Michael Bloom and Kif Leswing contributed to this report.

(This story is for CNBC PRO subscribers only.)

Apple CEO Tim Cook greets employees and customers on a surprise visit to the Georgetown Apple store in Washington, DC.

Jabin Botsford | The Washington Post | Getty Images

Apple easily topped analyst estimates for the first quarter, and Bank of America believes there are a number of upside catalysts ahead that will push shares even higher.

On Wednesday, in a post-earnings note to clients, the firm reiterated its buy rating on the stock, and raised its price target to $350, which is about 10% above where shares closed Tuesday.

Analyst Wamsi Mohan said a number of factors support his bull case on the stock, including demand in the company's hardware division, as well as "strong" gross margins and a "solid" balance sheet.