Citi Adds Apple (AAPL) to US Focus List on Expectation for 'Large Buyback' with Repatriated Cash

Citi group's Jim Suva takes a contrarian view on Apple as most of Wall Street is expecting a slowdown on iPhone sales and fails to see the upgrade cycle taking hold. Prior to Thursday evening's earnings report Apple has received a plethora of downgrades along with negative comments from sell-side analysts. Suva believes the Street sentiment has gone too negative too quickly and suspects the negative view on Apple is now overdone. The analyst remains Buy rated on Apple with a $200.00 price target and even added the stock to Citi's US Focus List Friday morning.

The reason for adding the stock to the Focus List is related to what Suva expects will be a large stock buy-back which could be announced in April due to the company's ability to bring back cash from overseas. Additionally Suva offers five possible upside catalysts such as a continuing super upgrade cycle through 2018, US tax repatriation holiday, Apple's sticky user base generating quality Services revenues, mid-term Enterprise push (Applewood) and an attractive valuation.

Apple shares sold off about 2.5% Friday morning sinking into a $163 handle following a Q1 top-line and bottom-line beat. However, the negative news came in the form of Q2 guidance below expectations along with sluggish iPhone unit sales.

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