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Apple gains as iPhone 5 comes into focus

SAN FRANCISCO (MarketWatch) -- Apple Inc. has been racking up steady gains over the past few weeks as expectations have built up around the widely anticipated launch of its next iPhone, which could come as early as next month.

The launch remains speculative, as Apple (AAPL) hews to its ultra-secretive nature and tradition of saying nothing about new products until they are formally announced.

However, as in years past, growing speculation and leaks in the media are feeding into expectations by investors, who remain highly keyed on the next update of what has become Apple's largest product, accounting for a majority of both revenues and profits in the first nine months of the current fiscal year.

Shares of Apple were up more than 1% to $643.13 by midday Friday, briefly hitting a new intraday high of $644.13 earlier in the session, according to FactSet. The stock has surged by 59% so far this year, making Apple one of the largest gainers among tech firms on the S&P 500.

The stock has picked up nearly 12% following a short-lived selloff that resulted from its July 24 earnings report, which showed a sequential decline in iPhone sales ahead of the new launch.

The device expected to be designated as the iPhone 5 is believed to feature a redesigned, thinner body, larger touch-screen and the ability to connect to the latest generation of LTE networks. It will also feature the iOS 6 version of the mobile operating system that Apple previewed in June and set for a launch date of "this fall."

Until recently, most analysts covering Apple had been expecting the new device to be unveiled in early October, with a market launch later that month. That's similar to the schedule Apple kept last year for the iPhone 4S. But some recent media reports say the company is planning a Sept. 12 event to announce the new iPhone ahead of a market launch later in the month, likely adding to the company's results for its fourth fiscal quarter.

Peter Misek of Jefferies & Co. boosted his price target on Apple to $900 from $800 on Friday morning, predicting that the iPhone 5 "will be the biggest handset launch in history."

In a note to clients, Misek estimated that 170 million global smartphone subscribers will age out of their two-year contracts in the second half of this year, with about 30 million of those already iPhone users who might be looking to upgrade to the new device.

"We therefore see significant and very fertile ground for the iPhone 5's success," Misek wrote.

Misek left his formal estimates unchanged, but projected that Apple will have about 15 million units of the new iPhone in finished-goods inventory by mid-September. He also said build plans out of Asian manufacturing facilities are pointing toward a launch of the much-speculated "iPad Mini" -- a 7-inch version of the best-selling tablet device.

Earlier in the week, Gene Munster of Piper Jaffray projected that a September launch could add sales of between 6 million and 10 million units of the new iPhone device to his targets for the quarter. This would boost the company's revenue about 8% above Wall Street's current consensus for the period, and also spell an upside of 12% from the current consensus target for earnings per share.

In another report on Friday, Nomura's telecommunications analyst Mike McCormack said an earlier iPhone 5 launch would result in "moving part of the pain" for the U.S. carriers who sell the device, which typically see margins constricted around the launch based on the price subsidies they pay Apple for the device.

"Broadly speaking, this shifts a significant cost burden into 3Q, which we estimate could correspond to 5mn iPhone sales across the industry," he wrote. Verizon (VZ) , AT&T(T) and Sprint (S) are all expected to be selling the new iPhone at launch.