Morgan Stanley: the iPhone 5S will have a ‘killer feature’

iPhone 5 promo video (back, black, camera closeup 001)

Morgan Stanley’s resident Apple expert Katy Huberty appeared on CNBC’s Fast Money Halftime Report this morning, in a rare TV interview, to field questions on her firm’s current positive buy ratings for both HP and Apple.

Asked about Apple, Huberty—who has an overweight rating on the stock with a price target of $630—says the company is poised for a big year with new software features for the upcoming iPhone, including one ‘killer feature.’

Popular financial blog Barron’s has the transcript of Huberty’s remarks:

“I do believe that AAPL is approaching a bottom. As you have heard, they are talking about returning more cash, and we think they will do that in coming weeks. But people don’t own AAPL for that, they own AAPL for innovation. You saw the Samsung [Electronics(005930KS)] Galaxy S4 come out last week, that shows you the innovation cards are up for grabs. What is lacking in that product [the S4] is a killer feature. We think that’s where Apple will surprise this year. This [iPhone] 5S cycle this year will be about a killer feature that drives consumers increasingly to the platform, and that increases the value of those 500 million accounts.”

For a little context here, let’s first take a look at the Galaxy S4. Revealed by Samsung late last week, the handset actually has a number of interesting, never-before-seen features like Smart Pause, Air View and Gestures, and S Health.

But much of the tech world has thus far been unimpressed with the S4’s Swiss Army Knife approach. Wired’s Mat Honan says it’s “completely amazing, and utterly boring,” and The Verge’s Vlad Savov is calling it the Galaxy SIII ‘S.’

Now let’s take a look at the next-gen iPhone. Not much is known about the handset, except for the fact that it’s rumored to be of the ‘S’ variety, meaning it will look a lot like its predecesor, and it should debut sometime this summer.

Of course, for most iPhone users looking to upgrade, hearing that this year’s device is going to be very similar to last year’s isn’t good news. But if Katy Huberty’s right, and the alleged iPhone 5S has a killer new feature, that could change things.

The question is, what could that feature be? Apple has a range of patents covering some crazy stuff, including inductive Smart Covers and squeezable handsets. And notably, we have yet to hear anything about what this year’s iOS 7 will add.

AAPL is currently up 3% today.

What would you want the next iPhone’s ‘killer feature’ to be?