As many fans of Apple Inc. (NASDAQ:AAPL)’s products are excitedly waiting for the iPhone 6, analysts at Jefferies believe that when the iPhone 5S launches this year, demand will be weak. They see a significant risk to Wall Street estimates for iPhone sales in the fourth quarter of the year. They maintain their Hold rating on the stock, although they raised their price target from $405 per share to $450 per share.

Apple iphone 5s

“Lackluster” iPhone 5S launch expected

Jefferies analysts Peter Misek, Jason North and Bill Kim issued a report to investors this week saying that they don’t believe the iPhone 5S, which is expected to be launched this fall, will be enough of an upgrade for users to want to buy it. Instead, they suspect current iPhone users will wait until the iPhone 6 is out next year.

The analysts note that about 60 percent of U.S. subscribers already own a smartphone and that smartphones made up 50 percent of the first-quarter global handset shipments. Like others, they suspect smartphone growth is shifting toward the low-end of the market and to emerging markets while high-end smartphone replacement cycles are getting longer. They say if Apple Inc. (NASDAQ:AAPL)’s next offering is compelling enough, it could interrupt that trend, but they don’t think the iPhone 5S will be different enough from the iPhone 5 or other smartphones.

Jefferies remains below consensus for Apple

They’re expecting to see a late September launch of the iPhone 5S, and they’re estimating that Apple Inc. (NASDAQ:AAPL) will ship 45 million iPhones during the fourth quarter of the year. Their earnings per share estimate is $11.21, compared to Wall Street’s consensus of $13.47, and they say it’s because their iPhone revenue estimate is 20 percent lower than Wall Street estimates. The Street’s estimates are based on build plans of 50 million to 60 million iPhones during the fourth quarter of the year. Jefferies analysts said their “recent conversations with investors indicate that buy-side consensus is not expecting Apple Inc. (NASDAQ:AAPL) to achieve the sell-side CQ4 iPhone numbers.”

A possible floor for iPhone shipments may exist

They note that during the fourth quarter of 2011 and the first quarter of 2012, the strong launch of the iPhone 4S pushed shipments up to 37 million and 35 million respectively. Since they suspect that the majority of those who purchased the iPhone 4S are on a two-year contract, there may be a floor for iPhone shipments over the next two quarters, which would help Apple Inc. (NASDAQ:AAPL). It stands to reason that those who bought the iPhone 4S will be eligible for an upgrade in the next upgrade cycle.

They see a floor of up to 70 million iPhone subscribers up for renewal, although they believe it will be lower than that number because of unlocked and prepaid iPhone purchases which aren’t contingent on contracts. Also early iPhone 5 upgraders might not want to upgrade again.