Citi initiates coverage of Apple stock with 'buy' rating, $675 target

Posted:
in AAPL Investors edited January 2014
Citi Research began covering Apple stock on Monday, and kicked things off with a note to investors projecting a $675 target price with a recommendation to buy.

Citi's price target implies an expected return of about 20 percent from AAPL stock. The firm noted that shares of Apple slid 28 percent on a "correction" that began on Sept. 21, which put it in line with past corrections in its own history, as well as those of its peers.

Year-over-year growth at Apple is expected to stabilize in the first half of 2013, which Citi believes would set the company's stock on course for the $675 price target.

But that price is also 11 percent below the consensus price target for Apple on Wall Street. That's because Citi believes that the risks for Apple "are increasingly coming into focus."

Citi


"We assert that Apple's share of the smartphone market is at risk from low-end smartphones and competition from other ecosystems," they wrote. "We see upside from tablets, but this negatively impacts (gross margins)."

Rather than have a lead analyst assigned to Apple, as most other investment firms currently do, Citi has opted to take a "unique team approach" in its Apple coverage. That strategy involves semiconductor analyst Glen Yeung, software analyst Walter Pritchard, and hardware analyst Jim Suva.

"This reflects Apple's broad impact to the technology supply chain and allows us to uniquely follow the company from several industry angles," Citi explained in a note to investors on Monday.
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Comments

  • Reply 1 of 22


    Nope. Apple is doomed.

  • Reply 2 of 22
    Analysts seemed to go slightly negative just because apple adjusted their device release schedule. This seems pretty shallow for people who study company financials for a living.
  • Reply 3 of 22
    MacProMacPro Posts: 18,015member
    ifij775 wrote: »
    Analysts seemed to go slightly negative just because apple adjusted their device release schedule. This seems pretty shallow for people who study company financials for a living.

    You think they study anything ... really? ;)
  • Reply 4 of 22
    quinneyquinney Posts: 2,523member
    "We assert that Apple's share of the smartphone market is at risk from low-end smartphones and competition from other ecosystems," they wrote. "We see upside from tablets, but this negatively impacts (gross margins)."

    Rather than have a lead analyst assigned to Apple, as most other investment firms currently do, Citi has opted to take a "unique team approach" in its Apple coverage. That strategy involves semiconductor analyst Glen Yeung, software analyst Walter Pritchard, and hardware analyst Jim Suva.

    "This reflects Apple's broad impact to the technology supply chain and allows us to uniquely follow the company from several industry angles," Citi explained in a note to investors on Monday.

    They should consider adding a customer-satisfaction-and-brand-loyalty analyst to their team, if they hope to ever understand and predict the success of Apple's products.
  • Reply 5 of 22
    I care more that the stock price is correct, both on the homepage as well as in the forums on AI than what City has to say.
  • Reply 6 of 22
    rogifanrogifan Posts: 10,669member
    Haha, and here's a headline in Marketwatch this morning (as AAPL is up $13 so far today): [url=http://us.rd.yahoo.com/finance/external/cbsm/SIG=11iiumket/*http://www.marketwatch.com/News/Story/Story.aspx?guid=2FB07CF4-37DE-11E2-BBB7-002128040CF6&siteid=yhoof2]Apple drawing cooler view from Wall Street[/url]

    And here's one from Yahoo's daily ticker: [url=http://finance.yahoo.com/blogs/daily-ticker/apple-could-fall-below-500-share-barry-ritholtz-135257198.html]How Apple Could Fall Below $500[/url]

    How pathetic that people get paid to produce page clicks more than accurate information. :rolleyes:
  • Reply 7 of 22


    Originally Posted by Rogifan View Post

    Haha, and here's a headline in Marketwatch this morning (as AAPL is up $13 so far today): Apple drawing cooler view from Wall Street

    And here's one from Yahoo's daily ticker: How Apple Could Fall Below $500

    How pathetic that people get paid to produce page clicks more than accurate information. image


     


    Needs to be illegal to screw with finances that have so much weight.

  • Reply 8 of 22
    3 guys to screw in a lightbulb????
    Well that's Citi they'll OVER anal-ize ( no mistake in spelling)
    They'll UÑDER value and they'll get it wrong 3x over

    As they already are. Is this A Citi Manáge a twa????
  • Reply 9 of 22


    675 is a lot more realistic than the $1000 predictions of a month ago. 

  • Reply 10 of 22
    cameronjcameronj Posts: 2,357member

    Quote:

    Originally Posted by BUSHMAN4 View Post



    3 guys to screw in a lightbulb????

    Well that's Citi they'll OVER anal-ize ( no mistake in spelling)


    I see what you did there. Veeery tricky! Thanks for pointing it out or I'm sure most would have been confused at your novel and brilliant word play.

  • Reply 11 of 22
    rogifanrogifan Posts: 10,669member
    Needs to be illegal to screw with finances that have so much weight.
    Seriously. On a day where Apple stock is up almost 3%, and coming off the previous week which was very good, Marketwatch runs a story about Wall Street cooling towards Apple. :no:
  • Reply 12 of 22
    MacProMacPro Posts: 18,015member
    675 is a lot more realistic than the $1000 predictions of a month ago. 

    I still have hopes though ... :smokey:
  • Reply 13 of 22
    rogifan wrote: »
    Haha, and here's a headline in Marketwatch this morning (as AAPL is up $13 so far today): Apple drawing cooler view from Wall Street

    And here's one from Yahoo's daily ticker: How Apple Could Fall Below $500

    How pathetic that people get paid to produce page clicks more than accurate information. :rolleyes:

    Headlines are written to grab eyes. AI does this constantly. The Yahoo story though paint a reasonable picture for an investor: If you own a stock that is up 50% yoy and you cut 1/3 of your portfolio, you have effectively re-balanced to avoid being over-weight in a single stock. This is good advice. It also does not mean that the stock is expected to drop; it means that you are being greedy if you don't take some off the table.

    It is important for people to paint reasonable expectations for Apple; that leads to steady growth. When you look at earnings forecasts for the December quarter, they are clearly out of line with what is happening on the street. Mac sales are going to be awful-- maybe even under 4MM units-- but the quarter overall looks quite promising!
  • Reply 14 of 22
    I still have hopes though ... :smokey:

    It sure would be fun, but I would be much more comfortable with it hitting in 24-36 months.
  • Reply 15 of 22
    jfc1138jfc1138 Posts: 3,090member

    Quote:

    Originally Posted by thataveragejoe View Post


    675 is a lot more realistic than the $1000 predictions of a month ago. 



    Depends on the time frame doesn't it? They're looking a lot closer in than some forecasts.

  • Reply 16 of 22
    cameronjcameronj Posts: 2,357member

    Quote:

    Originally Posted by Rogifan View Post





    Seriously. On a day where Apple stock is up almost 3%, and coming off the previous week which was very good, Marketwatch runs a story about Wall Street cooling towards Apple. image


    I don't understand what you find strange about that.  There's no crime in being wrong, is there?  Or when Apple stock goes up, do you think the only appropriate thing to do is to hold ones opinion if it goes against the grain?


     


    You realize this is a market, right?  Where for every purchase, someone has to sell?  Disagreement is what makes a market.  Trust me, when you look around and everyone agrees about a certain stock, you'd damned well better do the opposite because that's where the stock is going next.

  • Reply 17 of 22


    Originally Posted by cameronj View Post


    Disagreement is what makes a market.  Trust me, when you look around and everyone agrees about a certain stock, you'd damned well better do the opposite because that's where the stock is going next.



     


    When every analyst "disagrees" with a raise in stock price while Apple continues to outperform every other company, regardless of size, there's something wrong.

  • Reply 18 of 22
    hmmhmm Posts: 3,405member

    Quote:

    Originally Posted by Tallest Skil View Post


     


    Needs to be illegal to screw with finances that have so much weight.



    I think you over-estimate how far published opinions can actually push a stock. It's important to note that they are stated as opinions. You can always disagree with them. It seems like your personal concern is that too many of these guys agree with each other over a short time span, thus the suggestions of collusion, or is that incorrect?


    Quote:

    Originally Posted by Tallest Skil View Post


     


    When every analyst "disagrees" with a raise in stock price while Apple continues to outperform every other company, regardless of size, there's something wrong.





    Well gains in stock price typically reflect growth numbers. How are the other companies you mentioned doing in the stock market right now?

  • Reply 19 of 22
    cameronjcameronj Posts: 2,357member

    Quote:

    Originally Posted by Tallest Skil View Post


     


    When every analyst "disagrees" with a raise in stock price while Apple continues to outperform every other company, regardless of size, there's something wrong.



    Really now?  Find me an analyst that doesn't have a price target above the current price, and who doesn't have a buy on the stock.  You're clueless (shocker) if you really think that ANY analyst out there is predicting Apple stock to fall.

  • Reply 20 of 22
    rogifanrogifan Posts: 10,669member
    cameronj wrote: »
    I don't understand what you find strange about that.  There's no crime in being wrong, is there?  Or when Apple stock goes up, do you think the only appropriate thing to do is to hold ones opinion if it goes against the grain?

    You realize this is a market, right?  Where for every purchase, someone has to sell?  Disagreement is what makes a market.  Trust me, when you look around and everyone agrees about a certain stock, you'd damned well better do the opposite because that's where the stock is going next.
    All I'm saying is Apple's stock went up 3% (and closer to $600) today (partially because Citi came out and rated it a buy) and one of the top headlines on Yahoo Finance was how Apple's stock might be headed below $500. I'm sorry but that's nothing more than click bait. Write something negative about Apple these days and your're sure to generate page hits.
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