FORTUNE — “We think it’s time to revisit what makes Apple unique,” writes Lazard Capital Market’s Edward Parker in a note to clients that initiates coverage with a Buy rating and a $540 price target.
Don’t think of Apple (AAPL) only as the purveyor of jewel-like devices, he suggests. Or elegant, easy-to-use software. Or an “ecosystem” that keeps its customers coming back for more.
All of those factors are important, Parker writes, but none of them adequately explain how Apple manages to capture a disproportionate share of the profits in every business it’s in. (In the global market for smartphones, for example, it takes home more that 70% of the profit with less than 20% market share.)
What Wall Street needs, Parker suggests, is a fresh perspective — a new way of looking at the company.
And this is it: Think of Apple’s core business as selling end users flash memory at steep markups.
As Parker shows in the chart above, this makes Apple’s business model very different from Google’s (GOOG) or Samsung’s. Google’s mission is to drive traffic to its search engine and to data stored in its own cloud servers, not on users’ devices. Samsung makes and sells its own memory chips, but is also perfectly happy to let customers walk out the door and buy additional memory from its competitors.
Only Apple gives its uniquely loyal customers ever stronger reasons to buy higher-capacity phones, tablets, music players and computers at margins far higher than the market for raw memory can bear.
“Challenges remain and the company needs to keep the magic alive,” Parker writes in conclusion. “That said, we think the worst is behind Apple and believe it’s time to long the stock. Our 12-month price target of $540 is based on 12x our calendar 2014 EPS estimate of $45, representing a potential return of 25% from current levels.”
UPDATE: Asymco‘s Horace Dediu is unimpressed wtih Parker’s framework.