NEW YORK (

TheStreet

) --

Apple

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is holding a press event on Oct. 4 where it's widely expected to unveil the next version of the iPhone, and the guessing game about what's next in the evolution of this smartphone juggernaut has been going on for a while now.

Jefferies & Co., which has a buy rating on Apple's stock with a 12-month price target of $500, weighed in on Friday, giving a quick rundown of what is expected to be called either the iPhone 5 or 4S and echoing the sentiment of many that a more affordable version of the iPhone would also be unveiled, allowing the company to compete better with more cost-conscious consumers and in emerging markets.

"We believe the iPhone 5 will have an A5 processor (the same as the iPad 2) a better camera, a slightly larger screen, and be slightly slimmer," Jefferies said in its research note. "We also expect the announcement of a lower-priced iPhone that will basically be a lower-cost 3GS."

The firm is also expecting more color on Apple's plans for its presence in the cloud, and sees an iPhone launch with

China Telecom

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and its estimated 108 million subscribers in the calendar first quarter.

Jefferies anticipates the iPhone 5 will be available to carriers

AT&T

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,

Verizon

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, and yes,

Sprint Nextel

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as soon as mid-October.

But the firm backed off a prior belief that

T-Mobile

would also be able to begin offering the product in the fourth quarter, saying this could be delayed " possibly due to the pending AT&T acquisition," which is facing opposition from the Justice Department.

The comments come on the heels of a reiteration of the buy rating on the stock by Jefferies on Sept. 9. At that time, the firm tweaked its revenue estimate for the company's fiscal fourth quarter ending this month lower to $30.2 billion from $30.5 billion but lifted its earnings view to $7.06 a share from $7.02 a share because of gross margin strength. That view reflects a boost in its iPhone volume expectations for the quarter to 18.9 million from 18.4 million.

The current average estimate of analysts polled by

Thomson Reuters

is for Apple to report earnings of $7.11 a share in the September quarter on revenue of $29 billion.

Looking even further out, Jefferies gave its take on what could be store for Apple next year.

"We believe 2012 will see an LTE iPhone, LTE iPad, and a focus on video: as we now believe the new iPhone in October will most likely be called the iPhone 5, we believe the LTE iPhone will likely be named the 5S and launched in Summer 2012 (though it could come earlier)," the firm said. "We also expect an iPad refresh in CQ1 with a new screen, quad-core A6, and LTE. Finally, we believe video will be a focus and see an iTV possibly in H2

second half."

Apple shares were up 1% to $405.92 in afternoon action. At current levels, the stock has gained about 25% so far in 2011 and 40% in the last year. The shares hit an all-time high of $422.86 earlier this week before getting caught in the downdraft of the broad market's deep selloff on Thursday.

Despite the appreciation, the stock remains affordable with a forward price-to-earnings multiple of 12.5X, and it remains a darling of Wall Street analysts with 50 of the 54 analysts covering the shares at either strong buy (27) or buy (23) and the median 12-month price target sitting at $500.

--

Written by Michael Baron in New York.

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Michael Baron

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