Analyst: Be Patient With Apple, Investors

Apple (NASDAQ:AAPL) will not take any product step unthinkingly or on a whim, so the company’s investors will need to be patient with it, UBS analyst Steve Milunovich has said.

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“Now that the company is so large due to iPhone success, investors are clamoring for product expansion with larger as well as lower-priced phones with [Google (NASDAQ:GOOG)] Android gaining favor,” Milunovich wrote in a note to clients on Tuesday. “Innovation remains the key … Perhaps Apple will meet its internal need for differentiated product while covering more product space to grow revenue as it did with the iPod. If not, it probably will err on the side of yielding revenue dollars though giving up less in profit share.”

According to the analyst, while possibly the best way out for Apple was innovation in new categories, that would require investor patience. “Most companies would rush out a 5-6-inch phone; Apple probably won’t,” he added.

Milunovich, who reiterated his Buy rating and a $600 price target on Apple, also wondered if the company was facing an unusual identity crisis after coming across competent competition.

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“Under late founder and CEO Steve Jobs, the company ‘was all about focus,’ eschewing many projects and choosing just ‘great ones,’ and as a result, Apple historically has played the role of underdog, beginning with its niche Mac status after losing out to Windows,” the analyst wrote. “The iPod took over the MP3 player space but was never much threatened before the music function was subsumed into the iPhone.”

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