NEW YORK (AP) — Apple's stock climbed in premarket trading on Monday as an analyst lifted the company's rating and price target, saying improving gross margins should help the business until the launch of the iPhone 6.
Peter Misek of Jefferies LLC said in a client note that it appears Apple's suppliers have become more lenient on price, which is helping the company's gross margin. This, coupled with enthusiasm over the iPhone 6, could give a boost to Apple's shares, he wrote.
Misek said that there is excitement over the iPhone 6 because it will have a 4.8 inch screen. With about 50 percent of smartphone shipments having screens under 4 inches, Misek believes there could be many consumer upgrades to the new phone when it comes out.
The analyst estimates that 85 million iPhones will be eligible for upgrades when the iPhone 6 debuts. He thinks this figure could go even higher, estimating that another 5 million to 10 million people skipped the iPhone 5s/5c cycle when those phones debuted.
The iPhone 6 is targeted to launch in September 2014.
Misek raised Apple to "Buy" from "Hold" and increased its price target to $600 from $425.
Shares of Apple Inc. gained $3.52 to $486.55 in premarket trading about 3½ hours before the market open.