Last month, UBS cut its estimate of Apple iPhone production by 5 million for each quarter because of a 30% production cut That took the UBS estimate for Apple iPhone 5 production down to 25 to 30 million units for the current quarter ending in March. Milunovich estimates that Apple produced 45 million Apple iPhone 5 units in the previous quarter that ended in December and says that there could be an upside surprise when Apple reports earnings for its latest quarter on January 23rd.
The analyst sees Apple caught between peaking growth and margins, and a low valuation. He says that a tech stock's momentum usually rules which means that Apple could drop further. Still, Milunovich sees a strong December quarter and with the stock trading at just 8 times forward earnings, the analyst has kept his buy rating with a target of $700.
Esrlier on Monday, the stock briefly dipped below $500 at $498.51 and has come off the lows trading now at $505.04, off $15.26.