Financial analysts at Morgan Stanley see Apple as the long term winner in the mobile Internet market, and have raised the company's target stock price from US$105 to $180. iPhone demand through 2010, according to analyst Kathryn Huberty, is being underestimated by the market and will help drive Apple's stock value up.

"We expect a price cut to the current generation iPhone to drive 50 percent to 100 percent (two million to four million units) incremental unit demand," Huberty said.

Some of those iPhones will go to current owners, making for a significant number of upgrades once the new models ship. "Our survey data suggests 15 percent plus of the iPhone installed base typically upgrade to a new phone," she said.

The iPhone was discounted by other smartphone makers before its launch since Apple was the new comer to the market, and the long-term players didn't expect the combination iPod and smartphone to be a success right away. The iPhone's competition was, however, caught off guard by the device's popularity which has grown to snag over 30 percent of the market in the U.S.

Ms. Huberty is rating Apple as "Overweight," with a target stock price at $180, up from $105. Apple is currently trading at $124.97 in the pre-market, up 2.47 (2.02%).

[Thanks to Reuters for the heads up.]