Here’s why Apple shares near a record high are still undervalued, according to UBS

Scott Mlyn | CNBC

Investors should continue to buy Apple shares because the market will soon start to recognize the value of the company's powerful services business, according to UBS, which reiterated its buy rating.

Although Apple is "tied to hardware, [its] services probably is undervalued," analyst Steven Milunovich wrote in a note to clients Monday. "We consider the installed base and retention rate the primary drivers of device and services value. … If Apple services were valued similarly to PayPal, the stock would be at least 10% higher."