Apple Inc. (NASDAQ:AAPL) is expected to reveal a 4-inch iPhone at a media event in March. The company is also expected to unveil a 9.7 inch iPad and there are also reports of a second generation Apple Watch. The mid-cycle iPhone refresh is believed to feature curved edges, an A9 processor and NFC support for Apple Pay.

In its latest note to investors, Stern Agee analysts said that they do expect Apple to launch a 4-inch iPhone, a 9.7 inch iPad and announce that MacBooks will now incorporate Intel's Skylake processors at its unconfirmed media event in March. They however, think that an Apple Watch refresh is unlikely to be on the cards for now.

Stern Agee analysts predict March quarter iPhone shipments to drop over 20% year-over-year (YoY) to 48 million units. They believe that the March quarter would mark the trough in YoY declines will be because of last year's tough iPhone 6 comps. Prolonged replacement cycles and China's macro weakness remain headwinds for Apple, the analysts said.

However, they believe that YoY declines in the June and September quarter could fall to single digits after which the iPhone 7 cycle could bring over 10% YoY growth in calendar year 2017 (CY17) shipments. Sterne Agee has maintained a Buy rating with a $145 price target on Apple stock.

Lately, there have been concerns that iPhone sales might have peaked. Indeed, the iPhone 6s cycle last year failed to gain the desired level of traction. Apple reported the slowest YoY growth in iPhone shipments since 2007 in the December quarter. While this certainly came due to tough iPhone 6 comps, it should also be noted that the typical "s" cycle does not feature meaningful changes compared to the previous cycle. Moreover, many consumers opted to wait for the iPhone 7 which is expected to represent a big jump in specs.

Additionally, market research firms have pointed out that world smartphone markets are fast maturing. Chinese vendors like Xiaomi have flooded the market with low cost and high spec phones to intensify competition. Xiaomi is said to mulling a US launch by 2017. The company's presence in US could have some implications for Apple given that it's smartphones are already popular in South Asia.

As near term iPhone concerns gain strength, the rumors about a 4-inch iPhone that could cost between $400 and $500 have also gained credence. Dubbed the iPhone 5se or SE, this device is expected to increase Apple's influence in emerging markets such as India and China. The lower price point would, however, hurt gross margins.

Apple stock is up 0.40% at $101.17 as of 10:15 AM EST.