Apple shares can rise substantially if the company innovates in new product categories and significantly increases its capital return program to investors, according to UBS, which reiterated its buy rating on the smartphone maker.



For the stock to reach $200 by fiscal year 2019 "we assume strong growth in the 'other hardware' category as investors underestimate Apple's potential in wearables and the Ambient Paradigm begins to take hold," analyst Steven Milunovich wrote in a note to clients Tuesday. "We also assume buybacks are on the aggressive side relative to the last few years."



The analyst's "Ambient Paradigm" represents Apple's current and future potential product offerings in "wearables, AR [augmented reality], home automation, and transportation."