Pacific Crest’s Andy Hargreaves Monday morning raised his price target on Apple (AAPL) to $235 from $225, and upped his EPS estimate for the September 2009 fiscal year to $6.55 from $6.20. The moves reflect his bullish views on the prospects for the iPhone.

Hargreaves contends the new business model for the phone improves near-term cash flow, but does change the overall profitability of the device. He says the initial subsidy - which he puts at $350 per unit, higher than the $325 estimate calculated by Oppenheimer’s Yair Reiner - will roughly offset the net present value of monthly payments the company received from AT&T (T) under the model used for the first version of the phone.

Hargreaves also says that, while he is not changing his current unit forecast, there is the potential for “significant upside” to his current fiscal 2009 iPhone unit estimate of 15.5 million. (Some estimates on the Street are actually much, much higher.)

Apple Monday is off $1.03, or 0.6%, to $174.24.