iPhone Worries Continue to Hit Apple (Update 1)

Tickers in this article: AAPL
Updated from 8:11 a.m. EST to provide new product comments in the eighth paragraph.

NEW YORK ( TheStreet) -- It's another day, and another analyst has cut estimates on Apple , as the iPhone gets set for a refresh later this year.

Oppenheimer analyst Ittai Kidron lowered his earnings estimate for the June quarter, and cut his price target to $460 from $480, as Apple gets set to refresh the iPhone. He expects Apple will sell 26 million iPhones in the quarter, down from 27 million previously.

While an iPhone refresh is well known in the marketplace, Kidron now expects this to happen in September, something he didn't before. "We're adjusting our June estimates accordingly (lower ASP on mix shift/slight unit cut) to slightly below consensus," Kidron wrote in the note. "We're also significantly pushing back our iPhone estimates for the September quarter as our previous expectation for the timing of a new iPhone release looks overly optimistic." Kidron rates shares "outperform."

He now expects Apple to earn $7.23 a share on $35 billion in sales for the June quarter, down from $7.43 and $36 billion in revenue.

Analysts polled by Thomson Reuters expect Apple to earn $7.41 a share on $35.19 billion in revenue during the June quarter.

This isn't to say that demand for the iPhone is falling off a cliff, especially as Apple gets set to announce the iPhone 5S later this year. Kidron notes that demand for the iPhone 4 and iPhone 4S is "steady," but sees "mixed demand for the iPhone 5."

There's been increasing talk among analysts, journalists and industry watchers that Apple is getting set to launch a low-end iPhone , as consumers want to own the iPhone, but have not seen the differences from the iPhone 4S to the iPhone 5. CEO Tim Cook hinted that Apple could one day announce a lower-end iPhone, which could not only boost Apple's market share, but also its revenue. "We haven't so far," Cook said at a recent technology conference , when asked about extending the iPhone product range. "That doesn't shut out the future. It takes a lot of really hard work to do a phone when you manage the hardware and software and services in it. We've put our focus on doing that right. We haven't been focused on working multiple lines."

Kirdon expects shares to be range bound until new hardware is released, whether it's a new iPhone or something else. "Our projections don't anticipate a larger-screen iPhone in Sept. or new segments (iWatch/iTV), all of which could spur investor interest," Kirdon penned in the note. "We see a larger iPhone as a CY14 reality, but only mildly incremental to estimates/sentiment. We're lukewarm on an iWatch, but view iTV as having more gamechanging/innovation-reaffirming potential."