In an 80-page report to clients, Cowen analyst Krish Sankar has initiated coverage of Apple (AAPL) with an “Outperform” rating and a $220 price target, implying a 21% upside.

Sankar expects the Services business can double EPS contributions to $6 by fiscal year 2021 as increasing recurring revenue drives a higher multiple.

Annual iPhone sales are approaching replacement demand levels, the analyst writes.

MacDailyNews Note: Apple shares are up 1.10% to $183.70 in pre-market trading.