Apple has a new analyst on Wall Street and he likes the stock

Published Wed, Nov 13 20197:51 AM ESTUpdated Wed, Nov 13 20194:00 PM EST

A new analyst at RBC Capital Markets just started covering Apple's stock and is bullish on the company's long-term innovation and growth. The firm initiated coverage of Apple with an outperform rating and a $295 per share price target, a near 13% upside from its closing price of $261.96 on Tuesday. "With arguably the world's most popular consumer product providing a stable foundation, AAPL has avenues for deeper integration into its customers' lives and the balance sheet strength to return significant cash flow to shareholders," said RBC Capital Markets analyst Robert Muller in a note to clients. Shares of Apple are up more than 18% since the company released three new iPhones in September. The stock also got a boost from Apple's better-than-expected quarterly earnings last month. Muller said the iPhone base continues to generate cash flow for Apple and the potential for 5G will accelerate growth. "While product replacement cycles may be elongating, we see little reason to foresee a decline in smartphone penetration," said Muller. Although Apple's iPhone's business was down 9% year-over-year in the fourth quarter, the company signaled that it expected a big holiday quarter. Muller joins about half of the 43 Wall Street analysts that cover Apple with a buy rating. Of the 43, 14 analysts have a hold rating and 6 have a sell rating, according to FactSet. Some of the analysts with negative ratings say Apple's valuation is too rich. Muller said Apple's brand strength and margin profile justify the valuation. "For a company with a considerable track record of innovation, we view future products/services as likely and valuable, whether they be connected home devices or something yet to be dreamed up," said Muller. The analyst also believes the valuation is justified given the amount of money Apple will return to shareholders in coming years in the form of buybacks and dividends. "AAPL continues to return market-leading amounts of cash to investors," the analyst wrote. Apple's stock hit an all time high on Wednesday, closing up 0.96% at $264.47 per share. –with reporting from CNBC's Michael Bloom.

Apple chief design officer Jony Ive (L) and Apple CEO Tim Cook inspect the new iPhone XR during an Apple special event at the Steve Jobs Theatre on September 12, 2018 in Cupertino, California.

Justin Sullivan | Getty Images News | Getty Images

A new analyst at RBC Capital Markets just started covering Apple's stock and is bullish on the company's long-term innovation and growth.

The firm initiated coverage of Apple with an outperform rating and a $295 per share price target, a near 13% upside from its closing price of $261.96 on Tuesday.