NEW YORK (TheStreet) -- Apple (AAPL - Get Report) stock is up 1.17% to $96.21 in early afternoon trading on Tuesday as the smaller iPhone SE is performing better than expected, according to Nomura analysts.

"SE demand has been well above plan; we believe 2016 SE shipments may be closer to 30mn than our initial 10-20mn estimate," Nomura analysts wrote in a note released before today's market open.

While domestic phone upgrade rates are at record lows for the first half of the year, longer lead times in developing markets suggest that consumers are replacing the iPhone 6s with the more compact smartphone, Barron's reports.

"We believe the SE is, however, reaching its intended first-time buyer market in China," analysts added. "We expect Apple should be able to hold its 90%-plus retention rate, grow the iOS base, and ultimately restore unit growth."

Analysts believe strong iPhone SE sales will not be enough to offset weaker iPhone 6s sales, which could lead to disappointing results for the fiscal 2016 fourth quarter. 

"We believe demand for the Apple flagship will continue slipping," Nomura analysts noted. "While strong SE demand will partially mask the decline, consensus F4Q volumes seem overly optimistic."

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Separately, Apple has a "buy" rating and a letter grade of B at TheStreet Ratings because of the company's largely solid financial position with reasonable debt levels by most measures, notable return on equity and expanding profit margins.

You can view the full analysis from the report here: AAPL

TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.