Why The iPhone Buyer Upgrade Cycle Is Important To Apple's Near-Term Success

Apple Inc. AAPL unveiled new iPhones, iPads and a new watch at its "California Streaming" event on Tuesday.

The iPhone is Apple's most important product and the refresh was more evolutionary than revolutionary, Berstein analyst Toni Sacconaghi said Wednesday on CNBC's "Squawk Box."

There aren't many people buying iPhones for the first time, so the question is whether or not the refresh is enough to get people to upgrade, Sacconaghi said.

"Will you have 230 million or 240 million people buy new phones over the next year like they did last year or will that number be higher or lower? We think the number will probably be pretty similar or maybe a little bit lower," Sacconaghi said.

See Also: A Look At Apple's Chart After Big September Event

Apple is a durable franchise with a powerful installed base of over 1.5 billion users, but Apple's current valuation is at the high end of its historical range, he said.

Apple has traded between 18 and 32 times earnings over the last five years. It currently trades at about 28 or 29 times earnings.

Sacconaghi expects revenue and earnings per share estimates to show limited growth over the next year or so. The limited growth and current valuation are why the analyst is recommending investors hold the stock, he said.

The Berstein analyst has a Market Perform rating on Apple with a price target of $132.

AAPL Price Action: Apple has traded as high as $157.26 and as low as $103.10 over a 52-week period.

The stock is up 0.20% at $148.42 at time of publication.

Photo: courtesy of Apple.