As a standalone company, Apple's services business could be worth as much as $260B, Piper Jaffray says

Analyst Gene Munster issued a note to investors on Wednesday noting that shares of Apple's chief rival, Google, trade at about about 19 times the company's projected calendar year 2017 operating revenue, excluding net cash.

Applying that same metric to Apple would imply a valuation of around $264 billion for the iPhone maker's services business, Munster said. That compares to a current market capitalization of around $590 billion with $160 billion in cash.

Munster said using Google as a comparison seems to him to be the most fair way to judge Apple's services business. But he acknowledged that the tight integration between Apple's hardware and software makes it a difficult comparison.

Even if investors were to take a "safe" approach and halve Google's projected calendar year 2017 multiple to 10 times, that would still place Apple's services business as being worth $139 billion, he said.

Munster noted earlier this week that Apple's services business grew profit margins by 60 percent in 2015. He expects that growth to continue as the company leverages its huge installed user base.

Apple itself has been placing a greater focus on its services business in recent earnings reports. And Munster believes that Apple's continued focus on it will resonate with investors —  eventually.

"Apple's current valuation seems to understate the value being created by the Services business, and we expect the awareness of this to grow over the next several quarters as Apple continues to give more detail on the segment," he said.

Piper Jaffray has maintained its "overweight" rating for shares of AAPL, with a price target of $172.