Add Cowen to a list of Apple bulls as analysts there see the steady iPhone business driving the stock another 20 percent higher.

Cowen initiated coverage on Apple with an outperform rating and $220 12-month price target. The firm said the iPhone business remains a strong driver for the stock and provides investors with an “annuity.”

“Does the iPhone business make Apple a trading stock or bond coupon? We think it’s a bit of both,” Cowen’s Krish Sankar said in a note on Thursday. “The company has a 900 million strong, loyal iPhone customer base globally to which it can offer a growing ecosystem of devices such as wearables and new content subscriptions and service offerings.”

“With the iPhone installed base at 900 million units and oldest devices approaching five years, we believe annual iPhone shipments are running near replacement demand…the stock could be a good buy from a short-term trading standpoint as well,” Sankar added.

The iPhone business has actually been facing challenges as competition intensify in the mature market and Apple’s overpricing its latest iPhone models has also drawn criticism.

But Cowen believes that mature business offers investors a stable outlook of future cash flow for the next 5 years. With most devices needed to be replaced over that time period, that means annual shipments of 180 million (900 million divided by five years) can be counted on, the analysts wrote. The replacement sales offer a “potentially a supportive LT annuity for device sales.”

An annuity is a contract which promises investors a stream of income payments in the future.

Apple has made back the losses in 2018 with the stock rebounding more than 15 percent year to date. Shares of Apple rose more than 1 percent in pre-market trading on Thursday.

Cowen is also bullish on Apple’s services segment, estimating earnings from services to double in two years.

“We see scope for further expansion with increased scale in content subscriptions and higher contributions from App Store and Licensing revenues,” Sankar said.

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