Citigroup restarted coverage of Apple (NASDAQ:AAPL) on Monday with a buy rating and a price target of $675, even as the firm’s analyst Glen Yeung also pointed out what he said were potential weaknesses of the stock that have come into focus recently.
What Does Yeung Have to Say About Apple’s Shares?
According to the analyst, post a drop in price starting on September 21, Apple shares “have corrected consistent with the average correction in its own history, with companies that have achieved 4 percent of the [market weighting in the] S&P500, and with companies that have shown similar deceleration.”
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He added that historically, such corrections are followed by a 20 percent to 50 percent appreciation in the next 12 months. However, the firm said that its price target has been set at 11 percent below the average Wall Street figure to reflect “our perception that risks for Apple are increasingly coming into focus.”
CHEAT SHEET Analysis: Trends Support the Industry in which Apple Operates
According to Citi, Apple’s share of the smartphone market faces competition from low-end versions and “deceleration for iPhone sales is a virtual certainty in the next 6 to 18 months.”
While Apple continues to focus on improving the iPhone, alternatives that are not necessarily as feature-rich but can serve growing markets with their low price points are mushrooming. What does that mean for Apple?