Another analyst is out with more optimistic commentary on Apple (NASDAQ:AAPL) stock this week. Merrill Lynch's Wamsi Mohan reiterated a buy rating for the stock, citing strong demand for iPhone upgrades. The analyst's bullish note joins reports by two analysts last month who similarly cited a healthy iPhone business as an integral part of their optimistic outlook for Apple shares.

Mohan's view for Apple stock highlights how the company's smartphone segment remains a key part of its growth story.

A packed Apple store after the iPhone X launch

Nothing draws crowds to an Apple store like the iPhone X does. Image source: Apple.

Apple stock: Headed to $256?

After surveying 91,000 consumers, Mohan is convinced many iPhone owners are upgrading their devices.

"Our survey suggests interest in upgrading to an iPhone rose significantly in recent months, with steady growth following the announcements of the iPhone XS and iPhone XR," Mohan wrote in a note to clients on Tuesday (via CNBC). Specifically, Mohan said that 33% of survey respondents indicated they plan to upgrade to newer iPhones. This compares with only 15% of Samsung smartphone owners planning to upgrade, according to the survey responses.

Mohan also cited the overall stickiness of Apple's iPhone as a reason to be optimistic about the product segment. The survey suggested 70% of iPhone owners plan to buy another iPhone when they do buy a new smartphone. "iPhone users' stickiness is better than the competition," Mohan said.

He pointed to China and India as areas of "significant opportunity" for iPhone sales. This aligns with Apple's strong momentum in these markets recently. The company has seen double-digit growth in its overall revenue in greater China for four consecutive quarters. In the company's most recent earnings call -- for the third quarter -- CEO Tim Cook said that the "top three selling phones in urban China were iPhone, where iPhone 10 was number one and has been for a couple of quarters."

And in Apple's second-quarter fiscal 2018 earnings call, Cook said that India's smartphone market is "a terrific market" with "huge opportunities there for us." 

Mohan predicts that a strong year for the iPhone will help drive about 22% year-over-year growth in earnings per share. This compares with a consensus analyst estimate for 16% earnings growth. This earnings growth, Mohan believes, will help Apple stock rise to $256 over the next year.

Why the iPhone is the key

The iPhone remains a massive part of Apple's business, despite rapid growth from the company's services and "other products" segments.

Highlighting the iPhone's importance to Apple, trailing-12-month revenue from the product is up 13% year over year. Though this is much slower than services' and other products' 28% and 37% growth, respectively, during this time, iPhones accounted for 62% of total trailing-12-month revenue. Meanwhile, Apple's combined services and other products revenue represented only 20% of total revenue.

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