Seeing a new Buy rating from an analyst usually sounds good. That might not be the case in shares of Apple Inc. (NASDAQ: AAPL) even if shares are higher on the trading day. Citigroup initiated coverage of Apple with a Buy rating and $675 price target.

The problem here is simple: a target of $675 is about $85 shy of the Thomson Reuters consensus price target of $760. That is a sub-par target. It also implies that the upside is only 18% from Friday’s closing price, which is also sub-par for other analysts.

Citi’s expectation is that Apple’s year over year growth is expected to stabilize during the first half of 2013. This stabilization is what is said to lead toward the stock’s move up to the price target.

With shares down almost 30% from peak to trough in recent months, Citi said that historic corrections of this magnitude are often followed by appreciation of 20% to 50% over the next year.

Our take here is that a stabilizing trend may not come with the same welcome wagon. We have previously discussed that for Apple to return to its prior high would take about $100 billion in real investor capital to get the stock back up there. Shareholders used Apple as a major profit-taking tool to lock in those massive gains while capital gains are only 15%. It is yet to be seen whether or not investors will go back into Apple after the first of the year or whether or not investors look for “the next once in a decade opportunity like Apple” as Apple is already the most valuable public company.

As Apple has a 52-week range of $370.20 to $705.07, Citi is not even calling for Apple shares to see another 52-week high. Today’s Buy rating may translate to a “Hold-Plus” by our take.

JON C. OGG

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