Apple shares will thrive even under a difficult stock market, according to one Wall Street firm.
Bank of America Merrill Lynch reiterated its buy rating on Apple shares, citing the company's fortress balance sheet.
Apple is "a name to own in volatile market conditions," analyst Wamsi Mohan wrote in a note to clients Thursday entitled "Attractive in volatile markets, cash cushion like none other."
"In times of market turmoil, we turn to large cap stocks with low leverage, high cash balance, and attractive valuation. Apple offers all this as well as opportunities for future growth. Apple's large cash balance offers the opportunity to expand into new markets," he added.
Mohan reaffirmed his $220 price target for Apple shares, representing 38 percent upside to Wednesday's close. The $220 forecast represents a $1.1 trillion market valuation for the company.
The analyst predicts Apple will raise its dividend by 10 percent this year. Mohan forecasts the smartphone maker will be able to generate $50 billion to $60 billion in free cash flow annually for the next two years. He expects the company will announce a new share buyback program in April.
Mohan downplayed investors' recent concerns over slowing iPhone demand.
"While iPhone X sales may be lower than the Street had predicted (our estimates were lower) we view low single digit unit growth and mix adjusted ASP (average selling price) growth into 2019, with upside to gross margins," he wrote. "In addition, Services remain a key growth driver in future years."
The firm's note comes after the market's volatility rose this past week. A stronger-than-expected jobs report and wage number on Friday sent interest rates higher, sparking a 6 percent sell-off in the S&P 500 over two trading sessions.
Apple shares declined 2.8 percent Thursday.