Apple stock currently has limited potential downside for investors, UBS says

Analyst Steven Milunovich believes that unless the iPhone sees a colossal meltdown akin to the failures of BlackBerry, Apple should not trade any lower than its current range between $95 and $105. In his view, AAPL stock has limited downside for investors at its current price.

Milunovich believes Apple's current share price reflects the outlook of "product cycle bears," who believe the iPhone could see annual declines of between 5 and 10 percent, much like the PC business. But in his view, this outlook for the iPhone business is "probably too negative."

Instead, UBS has maintained a price target of $115 for Apple stock, with a "buy" rating for investors. At that valuation, Milunovich sees Apple largely as a service-focused company.

The analyst predicts that Apple will continue to sell profitable hardware, but will pivot to becoming a service-oriented company where its customers are monetized through products like Apple Pay, Apple Music and the App Store.

For shares of Apple to really move the needle and move to $120 and beyond, Milunovich believes Apple needs to introduce new hardware and products that will resonate with consumers. Even if a new product were to achieve just 25 percent of the success of the iPhone, he believes that could push the company's stock price to a range between $130 and $150.

Milunovich's most bullish scenario for Apple sees the company hitting "another hardware home run" that achieves 50 percent of the success of the iPhone. In addition, if the company were to launch a rumored "Apple Car" around the year 2020, he said he could see shares of AAPL reaching as high as $200.

For now, however, Milunovich remains squarely in conservative territory with his outlook on Apple, and believes the company's stock could reach $115 within the next year. His forecasts call for iPhone sales to grow by 2 percent in fiscal year 2017, driven by consumers who have yet to upgrade from the 4-inch form factor to larger models.