It looks like AAPL is just too big for Citi to continue to ignore.
On Monday, Citi Research began - for the first time ever - covering Apple stock. The process began with Citiís Glen Yeung issuing a note to investors with a buy recommendation, projecting shares to hit a price target of $675.
Although Yeung's projection is substantially lower than the north of $1000 projections made elsewhere on Wall Street for Apple, anyone who took the buy recommendation Monday morning was probably thrilled by the end of trading this afternoon. Shares of Apple climbed nearly $20, settling closer to the $600 level than we've seen in weeks.
Our analysis shows that Apple shares have corrected consistent with the average correction in its own history, with companies that have achieved 4% of the S&P500, and with companies that have shown similar deceleration. Historically, such corrections are followed by 20%-50% appreciation in the following 12 months. While a correction to below the average leaves risk, an adverse change in macro is required to take shares to these levels. While possible, we err on the side of optimism.