Does Apple Need an Ambition Overhaul?

Apple (NASDAQ:AAPL) needed to start focusing less on hardware sales and more on the potential revenue from its services, according to Barclays Capital analyst Ben Reitzes, who reiterated an Overweight rating and a $740 price target on the stock in a research note on Tuesday.

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“If Apple launches a new lineup of iPhone hardware including a version with a larger screen and a model for emerging markets (our checks back both in development), that would be a nice start,” Reitzes wrote, according to Barron’s. “But investors need to perceive yet again that Apple is a platform company that can fix itself and thrive (MUCH LIKE FACEBOOK (NASDAQ:FB) over the last few months or as Google (NASDAQ:GOOG) has done over the past year and a half).”

According to the analyst, new services could lead to a two-point recovery — equating to about a $100 move — in Apple’s multiple points rather quickly.

Reitzes provided an example from Google’s software value to prove the importance of having a strong ecosystem.

“We have argued that Apple’s shares hit an inflection point to the downside in September 2012 when investors realized that the Apple Maps endeavor was a significant mistake,” the analyst wrote. “The maps debacle showed investors how valuable Google’s technology was, how hard it was to replicate and how Apple may struggle as the world moves beyond iTunes toward cloud-based services. In short, our point is Apple needs to up its game in this arena.”

Reitzes said he expected to see the “seeds of this innovation” in March, when, according to him, Apple will preview iOS 7 at an iPad launch event.

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“We believe Apple can turn perceptions around with a real move into payments, augmented with technology acquired from Authentec making Apple’s hardware and services the most secure and trusted service,” the analyst added.

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