Apple Inc. (NASDAQ:AAPL) has received an Outperform rating along with a price target of $635 from Andy Hargreaves, an analyst at Pacific Crest. The stock was upgraded from Sector Perform based on the prospects of the much-awaited iPhone 6. According to Hargreaves, the company will come up with a 4.7 inch iPhone 6 by the end of 2014.

Apple Inc. AAPL

Apple customers won’t mind a price rise

The Cupertino, California-based company would post increased earnings and sales, and there will be a lot of upgrades this year from Apple users, who will buy a large screen phone. The price of the upcoming phone will be kept at $299 for the on contract pieces, which is $100 more than the iPhone 5S, believes the analyst.

According to Hargreaves, consumers of Apple Inc. (NASDAQ:AAPL) products are comparatively rich, and won’t mind the rise of $100 in price. The iPhone 5C, which was a low priced phone, failed to garner enough market indicating that Apple customers are ready to shell out an extra $100 for a better product.

Apple Inc. (NASDAQ:AAPL) launched the iPhone 5C priced at $100 with a two year contract while the iPhone 5S was priced at $200. If the average life of the phone is taken between two to four years then $100 is not a big deal. That was the probable reason, according to Hargreaves, why people chose the iPhone 5S over 5C. Hargreaves noted that Apple customers do not mind paying a premium for a better product, which will work in favor of the company, if it wants to launch the iPhone 6 at $100 more than the price of iPhone 5S.

Hargreaves differs from the consensus estimates and tech experts over the speculations that Apple would launch two new phones. He believes that Apple would launch only a 4.7 inch iPhone this year, and not the additional 5.5 inch iPhablet.

A good time pick the stock

Hargreaves believes that the company might offer some new products in the current year. Stock is expected surge from its current levels if Apple Inc. (NASDAQ:AAPL) launches an exciting product category. He said that now is the good time to pick the stock.

“While many observers have chided Apple for a ‘lack of innovation’ over the last two years, we do not expect a linear path to commercially successful new product categories,” says Hargreaves. Apple Inc. (NASDAQ:AAPL), on the other hand, will be extremely cautious in choosing its opportunities, and timing for the release of new products or services “only when it feels it has the best chance to succeed, which does not mean it is not innovative, just that it is not dumb.”