Credit Suisse initiated coverage of Apple, Inc. (NASDAQ: AAPL) with an outperform rating and price target of $500, saying that Apple should be able to deliver outsized revenue and earnings growth of 50 percent and 46 percent, respectively, over the next two years.

The expectations are significantly ahead of consensus expectations, given a sustained competitive advantage in software, hardware and services/apps ecosystem.

Interestingly, the outperform rating comes a day after JMP Securities analyst downgraded Apple to market perform citing a notable deceleration in its primary manufacturing partner Hon Hai.

However, Credit Suisse believes, across the key smartphone success factors of software, services, product portfolio, distribution, brand, IPR, and chipset efficiency, three years after the launch of the iPhone, few competitors have managed to narrow Apple's advantage.

This means within this fast-growth industry (smartphone unit growth of 52%/32% in 2011/2012), Apple's smartphone share should continue to rise to 20 pecent in 2012 driving volumes of 72 million in fiscal 2011 and 112 million in fiscal 2012 with revenue of $47 billion and $67 billion, respectively.

Meanwhile, Apple's iPad is addressing a $120 billion market in long-term.

Our proprietary analysis for tablets (takes into account factors such as regression analysis for long-term computing demand, pricing by tier, and cannibalization of multiple industries) highlights that the tablet market could rise to $120 billion by 2015, analyst K. Garcha wrote in a note to clients.

Within this segment, Garcha believes Apple will dominate, given aggressive pricing, time to market advantage and a software edge, maintaining share as high as 50 percent long term. This means that iPad should become a $34 billion business by fiscal 2012.

Further, our proprietary analysis implies that gross margins for this business will expand to 35 percent by end-FY11 from around the 27 percent levels seen in FY10, the analyst wrote.

The analyst also said he believes that a low-end iPhone, greater push into emerging markets, and enterprise traction could add $10 of EPS.

Even beyond this, the analyst sees scope for Apple to leverage its ecosystem and its current installed base of 200 million (rising to 700 million over coming years) with revenue from advertising, broadcasting or perhaps the TV business.

Shares of Apple were up about 3 percent to $338.90 on Nasdaq.