Stocks

Buy Apple Stock Because 'This Christmas Is Different'

Citigroup reiterated its Buy rating on Apple stock and raised its price target.

Citigroup reiterated its Buy rating on the stock and raised its price target.

Apple is getting a lift from Citigroup, after the bank reiterated its Buy rating on the stock and raised its price target.

Apple stock (ticker: AAPL) is up 1% in Thursday trading. The shares have gained 67% so far this year, compared with a 24% rise for the S&P 500.

“This Christmas is different for Apple,” Jim Suva wrote in a note to clients Thursday morning. “Apple’s product offerings as well as pricing strategies and recent demand trends augur for a better Christmas quarter compared with last [fiscal] year when Apple negatively preannounced.”

On Jan. 2 this year, Apple said revenue for the quarter ended Dec. 29 would be lower than it had told investors to expect, citing weakness in emerging markets, among other factors.

Suva says that this year, the rest of Wall Street is underestimating demand for the Apple Watch and AirPods. Taken as a while, he says, the company’s wearable-products business segment can bring in more than $10 billion in revenue over the holiday quarter.

Apple has, of course, put a huge emphasis on building up its subscriptions business in order to bring in more recurring revenue, reducing its reliance on big-ticket hardware purchases for sales.

Services now make about 20% of Apple’s total revenue and that share is growing at a steady pace. It increased 18% year over year in the company’s fiscal fourth quarter, ended Sept. 30.

On a conference call after that earnings report, CEO Tim Cook said he was “we’re very optimistic about what the holiday quarter has in store.” He played up not only Apple TV+, the streaming-video service, but also noise-canceling AirPods and the newest generation of iPhones.

Write to Ben Walsh at ben.walsh@barrons.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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