Pacific Crest Securities analyst Andrew Hargreaves stated in his latest research note that Apple (NASDAQ:AAPL) may release a smaller version of the iPad in October, thus making Apple stock even more bullish.

This smaller tablet computer, informally referred to by tech cognoscenti as the ‘iPad Mini’, will come with a 7.85-inch screen and $299 price point. In contrast, the iPad comes with a 9.7-inch screen – the new iPad is currently selling for $499 upwards, while the previous iPad 2 is still on the market for a reduced cost of $399.

The more affordable price point on the iPad Mini should make it Apple’s new budget-priced tablet, allowing it to challenge the upcoming Nexus 7 tablet of Google (NASDAQ:GOOG) and the existing Kindle Fire of Amazon (NASDAQ:AMZN). The Nexus 7 will be released later this month and priced at $199, same as Amazon’s once-sensational Kindle Fire.

Due to the anticipation surrounding the iPad Mini, Hargreaves noted an improvement in sales and profit projections for Apple. As of last Friday afternoon, Apple shares were at $579.80, an improvement of 2%.

Following the iPad Mini’s release, Apple stock may trade at about $690, an increase over the previous forecast of $630. There were also other factors that played a part in the more optimistic projections, such as the next-generation iPhone and the third-generation New iPad.

The iPad Mini may be a huge seller upon release, according to Hargreaves’ research note. About 10 million units are expected to be sold by the end of Apple’s fiscal first quarter (which ends December 2012). This may increase to a total of 35.2 million units by the end of Apple’s fiscal year, in September 2013.