Shares of Apple upgraded to Buy at Citigroup

In a research note sent to clients, analyst Richard Gardner upgraded shares of the Cupertino-based company to Buy from Hold while maintaining his 12-month price target of $105.

"There are several meaningful product catalysts around the corner, including Apple TV, Adobe Create Suite 3, Mac OS X Leopard and iPhone," he wrote.

The analyst added that he also expects "significant gross margin upside" during the company's current fiscal quarter due to rapid declines in flash memory and DRAM pricing.

"While there could be 'headline' risk associated with the options back-dating investigation and digital rights management posturing, risk/reward appears compelling following a pullback from $98 to $83," Gardner wrote.

"We believe clients should begin building positions at current prices, while any first-half weakness would simply represent an enhanced opportunity to increase positions."

Shares of Apple rose $1.13 or 1.36 percent to $83.27 on the Nasdaq stock market.