Swiss broker UBS reckons Apple's (NASDAQ:AAPL) iPhone upgrade programme is a "smart move", which could see revenue boosted as customers upgrade their handset more often.
It also turns the iPhone business into more of an 'annuity' business and less of a 'hits' one, says UBS analyst Steven Milunovich.
He rates the share a 'buy' with a 12 month price target of US$150, which is a fair distance from the current price of around US$116.
The analyst said the result of the new programme could be "both higher EPS and a better multiple as iPhone revenue becomes more sustainable".
"Apple will discuss the accounting impacts on its Sep quarter earnings call, but we assume no dramatic change in revenue recognition."
Put simply, the deal for customers is an interest-free, two-year loan, covering the cost of a new iPhone as well as AppleCare+ extended warranty. Users can trade in their phone and upgrade to the latest model after one year.
It could boost Apple revenues, even taking account more used phones hitting the market, said UBS.
The broker says it has also calculated that if Apple were priced as an annuity business, the stock could be worth over US$200.
"Although customer use of the Upgrade Program will occur gradually, investor perception that the growth and consistency of iPhone revenue are improving should benefit the stock."
Apple shares are up 0.48% to US$115.88 at the time of writing.