In a note to clients issued early Monday, Morgan Stanley’s Katy Huberty raised her Apple (AAPL) price target to $310 per share (from $275), suggesting that investors continue to underestimate 1) continued iPhone share gains, 2) better-than-expected iPad demand, 3) the growing Chinese market, and 4) increased penetration of the corporate market.

Huberty also raised her estimated 2011 iPhone sales to 61.5 million units, which she says is 25% higher than The Street’s consensus.  This is largely based on a proprietary Morgan Stanley/Alphawise survey that showed:

• The percentage of current iPhone customers planning to upgrade rose sharply from 18% in Nov. 2009 to 58% in March 2010. Huberty estimates that the combination of a growing installed base and a rising upgrade rate could yield 19 million upgrade units in 2011.
• She expects Apple to cut the price of the iPhone 3GS to $99. If Apple and AT&T (T) could also find a way to cut monthly service costs to $75 from about $90 today, demand for iPhones, she estimates, would increase by another 7 million units per year.
• According to the Alphawise survey, 16.8% of Verizon (VZ) subscribers say they are “very likely” to purchase an iPhone when and if it becomes available on their network (in the second half of 2011 in Huberty’s base case, first half in her bull case). This could add another 8 million iPhones per year.

Apple closed Friday at $242.32, up $4.56 (1.92%), but down from the all-time high of $272.46 it hit in April.

[Follow Philip Elmer-DeWitt on Twitter @philiped]