After the launch of the iPad Mini and iPad 4, Apple's stock has been experiencing a decline on a daily basis. However, Citi, an American multinational financial services firm, has said the shares have fallen far enough.
Apple shares have dropped by around 18 percent from a record-high of $705.07 in September, but Citi believes that decline won't continue for much longer.
It recommended investors to purchase shares, with the stock expected to reach $675 over the next 12 months. The company said Apple shares usually increases by 20 percent to 50 percent after sell-offs similar to the recent decline.
That said, Citigroup believes the Cupertino firm's share of the smartphone market is at risk due to low-end smartphones, as well as competition from other ecosystems including Android, with Google's platform dominating the market during the last quarter.
Citi also referred to new competition pressuring pricing, the acceleration of product introduction, which can ultimately hurt branding. "Room for error is diminished, placing growing emphasis on execution."
The aforementioned factors are making investors cautious, Citi said, which will likely prevent shares from reaching the previously seen high levels. Consequently, the firm said it's focusing on "incremental earnings changes," and that it's investing during periods of the greatest possible jump in earnings, while it sells shares when estimates depicts the biggest risk.
"This is tantamount to investing in 'product cycles,' and while we expect some investors will bristle at this approach, we believe returns will be optimized employing this approach in future," the company noted.
