Dont Worry, The Apple Franchise Is Still Solid

The future of Apple Inc. AAPL has again been called into question. It hasn't been the best month for the Fruit, but the $522 billion company isn't in any immediate trouble.

"There also seems to be little investor faith in current or potential new products, which we think might prove too bearish," UBS said in a note out Wednesday. "Consequently, we are inclined to take our short-term lumps and maintain the Buy rating given a solid franchise."

Like many on the Street, UBS is concerned about iPhone production and demand. The firm's December quarter estimate ($75.6 billion) is 1.4 percent below the consensus estimates and even at the lower end of Apple's guidance range. The firm's EPS estimate of $3.18 is also 2 percent below conses estimates.

Apple is scheduled to report its Q1 2016 earnings after the market closes on January 26.

Related Link: Apple Could Hit $75 In Market Disruption Scenario, But More Likely To Stay Range-Bound: Analyst

Citing International Business Machines Corp. IBM as a guide, UBS further noted that "currency could create downside pressure due to hedges rolling off and Apple not hedging China sales. For the March quarter we are 5% below consensus at $53.2bn of revenue and $2.16 on EPS. Our below consensus estimates are primarily driven by our lower iPhone unit estimate of 50mn versus the Street's 55mn estimate."

While UBS "doubt[s] the quarter will help the stock," the main issue is the timing of upgrades later than market share loss or margin pressure like there was in 2012.

UBS has a $130 price target on the stock. Shares traded recently at $93.77, down 3 percent on the day. The stock opened the year in the $105 handle.