UBS said in a note to investors on Tuesday that it's reiterating its buy rating on Apple with a 12-month price target of $170.
The bank believes the upcoming iPhone 8 has the potential for huge sales because of expected upgrades from phones sold in fiscal 2015. Shares of Apple were up 1.4 percent to $153.49 midmorning Tuesday.
UBS said it expects to see a surge of iPhone 6 owners upgrade next year, with the potential to make it a sales "supercycle."
"We expect a bulge of buying in F18 followed by some growth in F19," UBS analyst Steven Milunovich said in the note. "As the iPhone matures, investors should start to better appreciate the size of the installed base, which promotes hardware and services gains."
UBS notes the rumors that the iPhone 8 might be delayed until "possibly Nov." The firm also questions whether Apple's older iPhones will "ship at all in Sept and if their prices may be reduced by $100." The consensus of analysts is forecasting third-quarter revenue of $45 billion and about 40 million iPhone units at an average selling price of $625.
Milunovich said he expects September revenue guidance of $49 billion to $51 billion. "A guide below $49bn likely means a late release of the LCD models or a price cut."