Morgan Stanley analyst Katy Huberty issued a note to clients today claiming she is even more confident Apple will introduce a low-cost iPhone following a meeting with Apple CFO Peter Oppenheimer. This certainly isn’t the first time we’ve heard an analyst discuss the much-rumored low-cost iPhone. Since its release, the success of the lower-priced iPad mini has been the rationale behind many analysts prediction of a less expensive iPhone expected to launch sometime later this year. We’re not so sure Oppenheimer let anything slip that we wouldn’t have otherwise heard at the most recent earnings call, but Huberty wrote she is even more confident that the device is in the works following the meeting with the Apple executive (via BusinessInsider). Her reasoning: success of the iPad mini in emerging markets, desire among Chinese consumers to purchase a new, low-cost device, and the continued success of iPhone 4 during last quarter:

We also see several signs that a lower priced iPhone makes sense: 1) iPad Mini is expanding Apple’s customer base with 50% of purchases in China/Brazil representing new customers to the ecosystem. 2) Chinese consumers show a desire to purchase the latest version of iPhone (instead of discounted older generations). 3) iPhone 4 demand surprised to the upside in the December quarter. Even at a low 40% gross margin and 1/3 cannibalization rate, we see an “iPhone Mini” as incremental to revenue and gross profit dollars.