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How Free iPhone Deals From Carriers Are Lifting Apple’s Stock

All four major wireless carriers are offering customers a free Apple iPhone 7 with a trade-in of an older model. And though the moves are intended to help the carriers battle for switchers, the biggest beneficiary may be Apple itself.

After the carriers started reporting how well the trade-in offers were doing to increase iPhone sales, Apple’s stock jumped almost 4% on Wednesday. And it’s up 9% so far this week. Now Wall Street is weighing in, with analysts raising their estimates for iPhone sales and, in some cases, their price target for Apple stock, as well.

Up until recently, investors and analysts had been fairly pessimistic about Apple’s outlook because the new iPhone 7 seemed like only a modest upgrade from the prior year’s model and did not have a radically new exterior appearance. But now many are starting to think that Apple can beat low expectations. And the surprisingly generous carrier promotions, coupled with Samsung having to recall its hot-selling Galaxy Note 7, have altered the battlefield.

“We believe that the commentary of the wireless operators over the past two days about iPhone pre-order activity is meaningful, especially in light of conservative Street expectations for Apple,” BTIG Research analyst Walt Piecyk wrote on Thursday. “In our view, the comments by the wireless operators have reduced the risk on whether Apple can execute on our EPS estimates, including our above consensus estimates in the December quarter.”

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As a result, Piecyk said he was raising his stock price target for Apple, which closed Wednesday at just under $112, to $133 from $124 previously.

Credit Suisse analyst Kulbinder Garcha on Thursday raised his estimates of how many iPhones Apple (AAPL) would sell and the company’s earnings per share after hearing the carriers’ positive news. Garcha also cited positive news on iPhone sales from Japan. He raised his estimate for iPhone sales for the current fiscal year, which ends at the end of September, to 215 million iPhones from 208 million. For the upcoming year, he raised his estimate to 221 million phones from 217 million. He raised his estimates of earnings per share for the two years to $8.22 and $10.09 from $7.95 and $9.84.

For more on the iPhone 7, watch:

T-Mobile (TMUS) was the first to announce the impact of its free iPhone promotion, saying Tuesday that preorders were at an all-time record, and almost four times the level of orders for the popular iPhone 6 two years ago. Sprint (S) then said its iPhone preorders were four times higher than last year. On Wednesday, AT&T (T) said only it was seeing increased preorders versus last year. Verizon (VZ) made the vaguest comments of all, saying only that preorders were in line with business as usual.