Apple supply constraints 'easing,' Wells Fargo says gross margins could rise
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Apple (NASDAQ:AAPL) posted fiscal first-quarter earnings last night that were sharply better-than-expected and its outlook for the second-quarter assuaged investor fears, with Wells Fargo noting that the tech giant's potential for gross margin expansion is "unappreciated."
Analyst Aaron Rakers, who reiterated his overweight rating and $205 price target, highlighted Apple's commentary that it is still facing supply constraints, but those are starting to decline, making the quarterly results all that more impressive. 
Rakers also called out that Apple now has an active installed base of 1.8 billion devices, compared to 1.65 billion a year ago and subscriptions are growing at roughly 40 million per quarter, which could help drive margin upside.
"We think Apple can continue to expand margins via greater services mix, [and] improved mix within product categories, and an eventual easing of elevated supply chain costs," Rakers added.
Reaction to Apple's (AAPL) upbeat results could be see across Wall Street, as the company's shares rose 4% on Friday.
Additionally on Friday, Morgan Stanley called Apple's (AAPL) quarterly results a "clean" beat, as revenue, gross margin and earnings beat the firm's forecast, aided by Mac and Services strength.