Apple Inc. (NASDAQ:AAPL) spent much of 2013 in a downward spiral trying to recover, but will 2014 be different? Contrary to analysts at Wells Fargo, who downgraded Apple this week, Cantor Fitzgerald analyst Brian J. White thinks it will. In fact, he suggests that 2014 will be a year of innovation for a company which has been in a dry spell over the last three years.

Apple

Apple is a top large-cap pick

White admits that 2013 was a year to forget for Apple. However, he says that for 2013, the company is their top large-cap pick within their coverage universe. White’s research suggests that “Apple has been working hard to excite investors in 2014 with new product innovations.”

Apple stock rose just 5% in 2013 compared to the S&P 500 Index, which increased 30% during the year. Also 2013 brought Apple Inc.  (NASDAQ:AAPL)’s first earnings per share decline in 10 years. However, he believes the company will return to growth this year and that Apple stock will reflect this better performance.

Apple riding high on holiday momentum

The analyst reports that there’s continued strength in their Apple Barometer and that Apple Inc. (NASDAQ:AAPL)’s new products are strung. His Asia checks also suggest that the company had a strong holiday season. He notes that this year’s indicators are the opposite of last year’s data points in the company’s supply chain, which were concerning at the time.

White believes Apple will enter new product categories. Specifically, he thinks the rumored iWatch will come to market this year. In addition, his checks suggest there might be three different screen sizes in iPhones to choose from this year as Apple is expected to get into the big-screen smartphone segment with the iPhone 6 this year.

He also points to the many reports that a bigger 12.9-inch iPad will be coming this year, although he says his checks suggest this will be more of a hybrid device. In other words, he thinks it will not only be bigger than an iPad but also “more mobile” than the MacBook Air and MacBook Pro. White is calling this hybrid device the “iPad Pro.”

Valuing Apple

The analyst continues to believe that shares of Apple Inc. (NASDAQ:AAPL) are “depressed” at their current levels. He notes that the company had $129.8 billion in net cash available to it as of the end of the fourth fiscal quarter. As a result, he expects Apple to hand out more cash to shareholders this year.

He maintains his Buy rating and $777 per share price target on Apple stock.