Nomura’s Jeffrey Kvaal mentioned that data points across geographies indicate a robust iPhone 7 launch, with stronger than expected demand. However, the analyst believes Apple Inc. (NASDAQ: AAPL) “does not require a 7 supercycle for the stock to work.”

Kvaal maintained a Buy rating on the company, while raising the price target from $120 to $135.

Demand Ahead Of Expectations

The analyst believes the supply chain is getting ready to raise their production forecasts, following the healthy iPhone 7 launch.

Related Link: Buy Apple On The iPhone 7 Launch, As Demand Is Exceeding Supply: Citi

U.S. carriers had expected iPhone 7 demand to bring back the industry upgrade rates from the 6 percent seen in H1 2016 to 9 percent in H2 2016, although Kvaal expects the demand to be above expectations, possibly even reaching the 10 percent upgrade rate from the iPhone 6 cycle.

“Carrier promotions, certainly in the US, are more aggressive than in 2015. The travails of the Note 7 can only be helping,” the analyst stated, while noting, “Apple is launching the iPhone 7 into a subscriber base 35 percent larger than it was with iPhone 6.”

Estimates Raised

Kvaal raised the FY17 iPhone unit estimate from 230 million to 234 million, ahead of the consensus forecast of 221 million.

“This assumes Apple expands its iOS base at a pace consistent with FY16 and the replacement rate is slightly higher than in the 6s cycle, though well below the 6 cycle,” the analyst explained.

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