Yahoo Finance Live’s Brian Sozzi breaks down a Citi analyst’s bullish take on Apple.

Video Transcript

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JULIE HYMAN: Apple shares, they're down over 20% this year, but Citi analyst Jim Suva has six reasons why the stock will rebound in 2023. It's no surprise that this list caught the attention of Mr. Brian Sozzi. That's where we find his take today. Talk really quickly. Six reasons.

BRIAN SOZZI: Damn right, a list is going to catch my attention. I love me some lists, especially an Apple research note, and on a stock that our universe or ecosystem here at Yahoo Finance absolutely loves. Let me tick through these why Jim Suva, a long time tech analyst, is bullish on Apple into next year. And I'll try to make this quick, because I really want to get to number six here on this list.

First up, India. Suva sees just rising wealth or rising incomes in India being a key driver for Apple's business looking out next year, and even beyond next year. IPhone sales growth, he estimates that will return to growth in the middle of next year. Things will start to improve there. That is good.

Services sales upswing, same thesis as he is seeing in the iPhones. He expects services sales, which have decelerated over the past four quarters, to pick up steam again next year. Those new products. Suva is not alone in here expecting Apple to launch an AR VR some type of headset that takes on Meta's Oculus. And then number five, regulatory risk overblown as it pertains to the App Store in Europe.

And number six, which I really wanted to get to, is the cash giveaway. Because you see Apple stock down about significantly this year, and I think this is the market forgetting how much cash this company, in fact, has on its balance sheet. Suva sees Apple potentially spending $110 billion next year in total shareholder returns, meaning stock buybacks and share repurchases.

He estimates alone Apple could come back and repurchase almost 5% of its outstanding shares this year. That is a lot. And you look at Apple stock price there on the chart, you would argue, and as Suva is arguing, with $175 price target, that none of these things are priced in, especially that cash giveaway. And my take is really saying along those lines.

It is hard to envision, given the key drivers in Apple's business, that this stock is down again next year. And I'll add the caveat, we're not picking stocks here. This is not me recommending Apple shares. But just given the drivers in its business, even if we do get a moderate recession, you're now seeing Apple shares trade about 20% discount to its historical P/E ratio. Just given that discount and the drivers, it's hard to see them having another bad year.