Analyst: $AAPL Fundamentals Unchanged, Upgrade to 'Strong Buy'

Shares of Apple Inc. were upgraded on Wednesday from a "Buy" to a "Strong Buy" by S&P Capital IQ analyst Scott Kessler. The analyst told clients that Apple's fundamentals haven't changed, and that the recent decline of the stock—down 22.9 percent since September 19th—makes the stock a compelling value, "especially as the holiday shopping season is about to begin."

AAPL hit an all-time closing high of US$702.10 per share on September 29th, but closed at $541.45 on Tuesday. That's a 22.9 percent decline in less than two months, as investors began worrying about Apple Maps, the iPad mini, and a wide variety of macro economic factors.

“We think AAPL will benefit from a number of recent product refreshes, including its key iPhone and iPad offerings," Mr. Kessler wrote. "We also think the new iPad Mini will contribute to share gains. We acknowledge some slip-ups and management changes of late, but see the fundamental story as intact."

The analyst also told his clients that he believes Apple could use more of its $121 billion in cash for dividends and a stock buyback. He didn't explain why he thought this was the case, and Apple has not announced any plans along these lines. Apple is currently paying a $2.65 per share dividend and is already executing a $10 billion stock buyback program.

In addition to upgrading AAPL to a "Strong Buy," Mr. Kessler maintained his $700 price target for the company's stock.

The upgrade didn't do much to boost AAPL on Wednesday, as the stock closed down at $536.88, off by $6.018 (-1.11 percent), on light volume of 17 million shares.

*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.