Apple Faces Catalysts, Risk: Milunovich

Apple stock could see upside from its exposure to China, but also faces risks, UBS analyst Steve Milunovich said Tuesday on CNBC.

Taking cues from Apple CEO Tim Cook's appearance at the Goldman Sachs Tech Conference in San Francisco, Milunovich said it sounded like the company could be planning on a low-cost phone by year end in order to get consumers into the Apple ecosystem.

"Finally, we expect a deal with China Mobile," he said. "It's going to be very important to continuing the very high-end iPhone growth, and that's expected maybe in the fourth quarter of this year."

On "Fast Money," Milunovich also said that he did not expect Apple to keep its high profit margins intact.

"It's not clear to me that they're really signaling you're going to see a lot lower margins. The problem, though, is that even though they don't call themselves a hardware company, they are a device company," he said.

"And a 30 percent operating margin long-term historically has proven very difficult to protect. We are no longer looking for the gross margin to move back over 40 percent this year. So while we don't see it coming down a lot, I think longer-term it is a risk."

Trader disclosure: On Feb. 12, 2013, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders: Karen Finerman is long AAPL; Karen Finerman is long AAPL PUT SPREADS; Karen Finerman is long AAPL CALL SPREADS; Karen Finerman is long BAC; Karen Finerman is long C; Karen Finerman is long JPM; Karen Finerman is long XLF; Karen Finerman is long WMT; Karen Finerman is long TGT; Karen Finerman is long MSFT; Karen Finerman is long GOOG; Karen Finerman is short SPY; Karen Finerman is short IWM; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long AGU; Guy Adami is long MSFT; Guy Adami is long NUE; Guy Adami is long BTU; Tim Seymour is long AAPL; Tim Seymour is long BAC; Tim Seymour is long INTC; Tim Seymour is long SBUX; Tim Seymour is long BLK.