A prominent UBS analyst explains why he thinks Apple is a monopoly

Apple only holds 17.9% of smartphone market share, but one prominent analyst still thinks the world's most valuable company may function like a monopoly.

"Is Apple an anti-fragile monopoly?" UBS analyst Steven Milunovich asks in a note distributed to clients on Thursday.

Milunovitch points to Apple's pricing power as one sign that it may have an monopoly-like moat around its most profitable businesses.

"One characteristic of monopolies is pricing power. iPhone's ASP of almost $700 last quarter has rebounded to an all-time high despite currency pressure and could further rise with the iPhone 8," he writes.

Other smartphone makers must compete on price, one of the reasons the iPhone accounted for 79% of global smartphone profits, according to a recent estimate.

Milunovich cites independent Apple analyst Horace Deidu while making the case that Apple may be "developing a greater ability to compete and adapt" than its rivals like Microsoft, Facebook, Google, and Amazon, which all sport much higher PE ratios than Apple.

"[Deidu] argues that Apple's position is less fragile than it first appears, which investors are picking up on with increased emphasis on services and the installed base. Although Apple is viewed as less powerful than its large cap tech brethren, it exhibits superior pricing power," Milunovitch writes. While Google's cost-per-click is declining, the average price of the iPhone is staying high.

The note also touches on Nassim Taleb's concept of "anti-fragility" as it applies to Apple, which is a way of looking at companies that benefit from volatility and change.