Apple Inc is to welcome its latest 52-week high on the iPhone and the iTunes App Store growth, analyst says this week, lifting price target on Apple from $200m to $235.

The sole driver of the increase in Apple's price target is a higher valuation of the iPhone, Charlie Wolf of Needham & Company wrote in a research note to investors this week. Courtesy of network effects, the explosive growth of the iTunes App Store...should translate into a higher growth trajectory of iPhone sales going forward, Wolf added.

According to Wolf, the iPhone is in a position to chalk up share gains in this fast-growing market that could surprise everyone by exploiting a commanding lead in the all-important smartphone applications market.

In many respects, Apple and Amazon are in similar positions, says Wolf. Amazon holds a relatively small but growing share of the e-commerce market, which itself is small, but growing an order of magnitude faster than the physical retail market.

Wolf admits that his latest forecast is judgmental in that it's based on the premise that software, namely iPhone applications, will drive hardware, namely iPhone sales. But he explains that the premise does have a proven track record in markets characterized by increasing returns and network effects.

We have upped the number of iPhones that will be sold in 2018, the final year in our model, from 67 million to 107 million, Wolf added. Our forecast has the phone capturing 20% share of the smartphone market in that year, up from 12.5% recently. We should note that the iPhone's share of the worldwide market is already around 12.5%. So our forecast is by no means an aggressive one.