The iPhone XS and iPhone XS Max are the first iPhone models to be offered with a 512GB storage tier, and analysts are citing this as a reason to be bullish on Apple and increase their AAPL price target. Citi Research is out today with a new investor note in which it says customers are favoring iPhone XS models with higher storage amounts, which happens to come as memory prices fall for Apple.

As reported by CNBC, Citi Research has raised its AAPL price target from $230 to $265. In the investor note, Citi analyst Jim Suva explained that the firm’s reasoning behind the increase is higher average selling prices for the iPhone XS, as well as customer tendency towards the higher-capacity models:

“We increase our financial model primarily due to higher ASPs [average selling price] & stronger gross margins given the consumer preference for higher memory configurations of iPhones coupled with the new falling memory prices,” analyst Jim Suva said in a note to clients Monday. “We believe Apple shares are now setup as an attractive value investment with right-sized expectations.”

Suva went on to note that while a higher memory configuration costs the consumer roughly $100 more, it only costs Apple around $20 – thanks to the fact that flash memory prices have dropped by 18 percent since March.

All in all, Suva says that supply chain checks show that iPhone XS and iPhone XS Max buyers, at least this early on, are opting for the higher memory configurations. This is the main driver behind Citi’s bullish APPL price target.

“Our checks suggest solid demand for iPhone XS & XS MAX and importantly most consumers opting for higher memory iPhone configurations,” the analyst said.

Citi isn’t the first analyst firm to explain customer interest in higher-capacity iPhone models. Last month, Ming-Chi Kuo cited supply chain research in claiming that the 256GB model was the most popular iPhone XS model at that point.

Did you opt for the higher-capacity iPhone XS? Let us know down in the comments!

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Chance Miller

Chance is an editor for the entire 9to5 network and covers the latest Apple news for 9to5Mac.

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