A woman looks at the screen of her mobile phone in front of an Apple logo outside its store in downtown Shanghai September 10, 2013.
A woman looks at the screen of her mobile phone in front of an Apple logo outside its store in downtown Shanghai September 10, 2013. Reuters

Apple investors may see significant gains in the company's stock in the next 12 months. According to Pacific Crest Securities Analyst Andy Hargreaves, Apple stock could reach $635 with the impending release of iPhone 6 rumored to have a bigger screen than the usual 4-inch iPhone.

The bold speculation may be fueled by several assumptions, including Apple's new product releases in the coming months. Hargreaves thought Apple could position the new iPhone as a premium device with a more expensive price than iPhone 5S.

As the cheaper iPhone 5c seemed to perform poorly and didn't have an impact on the sales of iPhone 5S, Hargreaves added it indicates that people will pay a premium price for a special device. The idea goes against the current industry trend of smartphone companies selling cheaper phones to consumers.

The analyst believed the $635 price target for Apple shares rely on the sales performance of the presumably more expensive iPhone 6. He assumed it will grab 10 percent of the giant market for smartphones larger than 4-inches which may result in a $4 increase in earnings per share. The analyst noted it will boost Apple's earnings per share by 9 percent with a price-to-earnings ratio of 14.3.

Apple's stock was believed to be "criminally undervalued" compared to Google shares, according to observers and some analysts. This made Hargreaves' speculations interesting as a $635 per share of Apple stock could go a long way in increasing Apple's shareholder value.

Some analysts considered Apple to be undervalued compared to Google since Apple has $100 billion of cash lying around and an annual income of more than $37 billion per year. Google earns under $13 billion. Despite the perception of being an undervalued stock, Apple shares may soon be put to the test with the future release of new products, including the rumored Apple TV, iWatch and the next generation iPhone and iPad.

Apple iTunes Radio Beat Spotify

According to a report by Fortune, Apple's iTunes Radio has overtaken Spotify to claim the third spot in the U.S. audio streaming market. iHeartRadio was in second place while Pandora led by a wide margin at 31 percent.

iTunes Radio has only been launched less than 6 months ago. Apple's streaming and recommendation service is expected to catch up to iHeartRadio currently in second with 9 percent compared to iTunes' 8 percent. Apple's iTunes Radio has 20 million users and continues to grow fast based on data by Electronista.