Apple Inc. (NASDAQ:AAPL) is expected to launch two iPhone models; iPhone 5S and a mid-range iPhone 5C, in an event tomorrow. BMO Capital Markets analysts Keith Bachman, Jung Pak and Gaurav Gupta believe that apart from two iPhone models, Apple may also unveil a large screen iPad in the event.

Apple

Analysts believe that the iPhone will be launched in stores immediately after the event, and the low-priced iPhone will be available globally.

Apple may continue iPhone 4 models until year end

Apple is expected to carry on with iPhone 4 and iPhone 4S for this year at least. Additionally, according to the analysts, Apple will keep iPhone 4 and 4S as entry level phones in the iPhone family.

No precise estimate on pricing  

The upcoming mid-tier iPhone will be priced around $400, however, there are slim chances that Apple Inc. (NASDAQ:AAPL) will give a clear price tag to its mid-range phone in this event. The only way in which the price can be estimated is if this mid-tier iPhone is immediately available on Verizon or AT&T websites, including prices of phones sold without a contract.

Asian carriers, according to the report, hold that the subsidy level will be lower on the new mid-range iPhone than the subsidies on the current iPhone models. So a clear picture of average selling prices (ASP) will be available only after the launch.

As far as investors are concerned, analysts at BMO Capital note that Apple Inc. (NASDAQ:AAPL) should keep a check on its desire for aggressive pricing to balance effect on the brand and longer term marginal implication. Investors are estimating the new mid-range iPhone to be priced in the range of $300 to $450. Investors do not expect Apple to keep the price of these new phones lower than $300.

Impact of event to be neutral

Gross margin guidance by Apple Inc. (NASDAQ:AAPL) is expected to include the margin effect of both soon to be launched phones as Apple will start shipping both phones in the September Quarter. Analysts are not sure about the effects of Apple announcing the China Mobile deal this week, but there are strong possibilities of Apple striking a deal to ship iPhones before year end. Apple TVs and watches are unlikely to be launched in the upcoming event.

Analysts at BMO Capital are expecting the impact of the event to be neutral with a mild downside depending upon 1) the timing of availability of the new iPhones, and 2) ASPs implications, if any.