UPDATE: Pacific Crest Upgrades Apple; Announces Price Target

In a note released Tuesday, Pacific Crest analyst Andy Hargreaves upgraded Apple (NASDAQ: AAPL) from Sector Perform to Outperform and announced a price target of $635.Hargreaves largely attributed the upgrade of Apple to high expectations for the iPhone 6 and expects the replacement rate for iPhones to remain stable for "the foreseeable future." Looking at a possible customer grab, Hargreaves stated, "We believe Apple can sell a 4.7" iPhone at a subsidized price of $299, which should generate incremental gross profit on replacement sales and attract new customers that had previously purchased Android phones specifically for a larger screen." Taking this into consideration, Hargreaves estimates this could add as much as $4 to his fiscal year 2015 EPS estimate.Hargreaves concluded by acknowledging the possibility for a cheap call option at current levels based on the "potential for new product categories."At last check, Apple was trading up less than 1 percent at $533.46.