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Topeka Capital Markets analyst Brian White predicts that Apple will freshen up the iPhone 5 in May/June with multiple screen sizes and multiple colors.

In his report, White suggests that Apple's stock price drop in the last quarter was largely due to tax-related selling and he maintains a Buy rating on the company with a target of $1,111.

"Apple is our top overall pick for 2013," White wrote in an investor note. “With the 25% correction in Apple’s stock from the high in September, the stock is now trading at just 7.7x our CY13 EPS estimate (less cash) and the company’s portfolio has never been stronger, in our view. We believe tax-related selling was largely to blame for the downward bias in the stock price as we exited 2012 and this created a negative news cycle around Apple that we believe will be broken as we enter 2013. We believe there is still plenty to look forward to at Apple, including the potential for greater choices (i.e., colors, sizes) around the next iPhone in 2013, combined with accelerating momentum with the iPad mini and continued strength with the iPad franchise at large."

Interestingly, White says that according to checks with Apple suppliers the next generation iPhone will feature some big changes including its availability in multiple colors and screen sizes.

“Our checks indicate that the next iPhone will have more choices for customers,” the analyst wrote. “This entails an expansion in both the color patterns and screen sizes with the next iPhone (i.e., likely called the iPhone 5S) that we currently believe will be launched in May/June with certain supply production starting in March/April.”

“Our checks are also indicating that the next iPhone will offer customers more choice in terms of screen size,” White reported. “Although Apple offers a 4-inch screen on the iPhone 5 and a 3.5-inch screen on the iPhone 4S and iPhone 4, the Company has never offered multiple screen sizes for a single model. We believe this is about to change with the next iPhone offering different screen sizes that we believe will allow Apple to better bifurcate the market and expand its reach.”

White predicts the next iPhone will be available in five different colors: pink, yellow, blue, white & silver and black & slate.

Notably, it's recently been speculated that Apple may be moving to a semi-annual release cycle for its products which would see the iPhone and iPad receive one major and one minor update each year. That would fall in line with a May/June release for the iPhone 5S.

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