2017.10.1701:04:00UTC+00Apple Shares Surge on KeyBanc Rating Upgrade

Shares of Apple Inc. skyrocketed on Monday after the tech giant's rating was upgraded at KeyBanc Capital, which said the smartphone maker's profits will be bolstered by the expensive iPhone models.

Analyst Andy Hargreaves upgraded his rating on Apple to overweight or buy, after being at sector weight for the last four-and-a-half months. The expert set a base-case price target of $187, which is 19 percent above the closing price of $156.99 per share on Friday.

He also predicts that the company will post better-than-anticipated earnings in the following year. The analyst sees Apple's FY2018 iPhone selling price and gross profit margin will be at 760 and 39.5 percent respectively. This is against the average forecast of $725 and 38.6 percent by Wall Street, seperately. Due to the raised outlook, he estimates earnings for fiscal year 2018 to come in at $11.68 per share, compared to the prior estimate of $11.07 and against Wall Street's consensus of $11.03.

Previously in June, Hargreaves downgraded the stock on worries of a lack of growth in iPhone unit sales. He said he believes downside risk is restricted, given the firm's ability to have price its products.

In premarket session, shares of Apple advanced 0.9 percent following the report, and rose as high as 1.8 percent in midday trading to hit a four week high.