Less than a week after establishing a bull-case price target of $600 on Apple (AAPL 0.59%) shares, Wedbush analyst Daniel Ives is back with an even rosier forecast. Yesterday morning, he reiterated his outperform rating while boosting his estimates on Apple. Ives has increased his overall price target from $515 to $600 -- a new Street high -- and set a new bull-case price target of $700.

That would give Apple a $3 trillion market cap, based on the current number of shares outstanding.

CEO Tim Cook onstage with a large Apple logo displayed behind him

Apple CEO Tim Cook. Image source: Apple.

The biggest iPhone launch since 2014

Ives remains extremely bullish on the forthcoming iPhone 12 launch, expecting the new 5G smartphone to trigger a massive wave of upgrades, even as the COVID-19 pandemic has broadly hurt consumer demand for expensive smartphones.

"Taking a step back we believe iPhone 12 represents the most significant product cycle for Cook & Co. since iPhone 6 in 2014 and will be another defining chapter in the Apple growth story looking ahead despite a softer consumer spending environment in our opinion," the analyst wrote in a research note to investors. The iPhone 6 enjoyed a particularly strong refresh cycle, as it included Apple's foray into the "phablet" market via the 6 Plus. (Fortunately, that term for large phones has mostly died.)

China is expected to account for around 20% of iPhone upgrades, in Ives' estimation. There had been recent concerns about President Trump's ban on Tencent, which could have potentially hurt iPhone sales if the ban impacted WeChat, the most popular chat platform in the Middle Kingdom. The Trump administration has now reportedly clarified that Apple will still be able to do business with WeChat. Ives similarly believes that there will not be any major effect on the Mac maker's ecosystem in China, based on conversations with contacts in Washington.

The analyst added, "To this point we are seeing considerable strength from the China region over the last few months with positive trends heading into the Fall, an impressive trajectory we expect to continue heading into the next 6 to 9 months."

Continued multiple expansion

Ives has been discussing the market's "re-rating" of Apple stock throughout the year, referring to investors increasingly appreciating the earnings power of the services business and rewarding the shares with a premium valuation compared to the broader market.

Apple stock has historically traded at a discount to the S&P 500 but has been able to maintain a premium to that index this year. The stock now trades at over 38 times earnings, compared to the S&P 500's current earnings multiple of 29.9.

The analyst believes that process will continue as the services segment keeps growing, and multiple expansion could be a powerful driver of the stock's upside. "We maintain our outperform rating with Apple being our favorite name to play the 5G theme and strongly believe a further rerating of Apple's stock is on the horizon," Ives said.