Morgan Stanley says Apple's iPhone sales may double in '09

Apple Corporation CEO Steve Jobs speaks about the price of the new iPhone 3G during his keynote speech at the Apple Worldwide Developers Conference in San Francisco, California June 9, 2008. REUTERS/Kimberly White

(Reuters) - Morgan Stanley raised its price target on Apple Inc AAPL.O shares to $210 from $185, saying it expects the company's iPhone unit sales to double in 2009 at the new $199 price point.

“We believe the market generally expects a doubling of iPhone units with the lower price point ($199) and we believe this is realistic, if not conservative,” the investment bank said in a note.

Morgan Stanley expects 27 million iPhones to be sold in calendar year 2009 with an average revenue of $550 per unit.

The investment bank said Apple’s operating leverage remains understated and the mass market price and distribution of the new 3G iPhone will be a key driver of higher margin software and service revenues over time.

Shares of Apple closed at $181.43 Tuesday on Nasdaq.

Reporting by Ratul Ray Chaudhuri in Bangalore; Editing by Vinu Pilakkott