Despite market fears about the implications of peaking iPhone sales, UBS believes that Apple Inc. AAPL 0.83%’s downside is limited in the near term and the stock could re-gain positive momentum headed into 2017. Analyst Steven Milunovich predicts Apple’s June quarter profit decline was likely as bad as it’s going to get for the company for a while.

“The June quarter’s 23 percent earnings decline should be the worst to be followed in our model by a Sep decline of 17 percent, a Dec decline of 2 percent, and then increases as comparisons ease,” Milunovich explained.

At Apple’s current share price, 84 percent of the stock’s value is derived from its current earnings, and only about 5 percent of its value comes from projected earnings more than three years in the future. Milunovich believes the market is pricing in an overly negative long-term outlook for Apple.

In the near term, UBS sees little downside to Apple given its low valuation. However, Milunovich notes…

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