Apple shares are up $1.40 to US$131.46 today (as of 1PM EST) following a bullish note from Morgan Stanley's Katy Huberty, who reiterates an Overweight rating, and a $166 price target, writing that her estimates are going up after her firm's research indicated that "iPhone demand continues to track above consensus expectations and Watch demand jumped post launch."

Huberty wrote about the iPhone: "Importantly, demand continues to top expectations despite Apple approaching the end of the current product cycle." Huberty added that iPhone demand has been running just below a "build" estimate of 54 million iPhones being produced this quarter and noting that Apple also has to replenish supply-chain inventory.

Huberty now sees Apple selling 36 million units of the watch in the first 12 months it's on sale, versus a prior 30-million-unit estimate. Huberty and her associates noted that "Apple Watch is helping educate consumers and build demand for the entire category." For more on this story, see the full Barron's report by Tiernan Ray.

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