Apple Upgraded ... Surprise, Surprise

Tickers in this article: AAPL GOOG

NEW YORK ( TheStreet) -- Apple (AAPL) has seen earnings estimates cut and its stock downgraded over the past few weeks, as Wall Street turns bearish on the tech heavyweight. So when Apple is upgraded by a former bear, it makes one stand up and take notice.

BTIG analyst Walter Piecyk upgraded Apple to "buy" from "neutral," setting a $540 price target, implying some 25% upside from current levels. Piecyk noted that the stock is reflecting low buy-side expectations, as the sell-side moves one by one to cut earnings estimates. In recent weeks, Credit Suisse , Jefferies, Barclays Capital and Citi have all cut earnings estimates , citing concerns on the iPhone, as well as the iPad.

This coincides with what buy-side investors, particularly Jeffrey Gundlach, have said in recent weeks. The Doubleline Capital investment chief recently said that Apple was "really oversold" in the short-term, and could go higher as its next move. He noted that he did not think Apple shares will see $700 "anytime soon."

Piecyk lowered fiscal 2013 revenue by $6 billion to $174 billion, "due mainly to lower estimated iPhone and iPad sales," a chief concern among Wall Street analysts. The fear is that competition from Samsung, Google (GOOG) , as well as the coming upgrade to the iPhone 5S, expected in the summer, will slow down iPhone sales in the near-term.

For the quarter ending in March, Piecyk lowered his iPhone estimates to 34.5 million units, down from 36 million, but kept iPad sales steady at 20 million units. He now expects Apple to generate earnings of $9.40 a share on $41 billion in revenue, down from a revised $10 a share and sales of $42.5 billion. He also lowered his June quarter estimates, expecting Apple to earn $7.80 a share on $34.63 billion in revenue.

Wall Street analysts surveyed by Thomson Reuters expect Apple to earn $10.21 a share on $42.89 billion in the March quarter.

Apple has come under criticism in recent months, as the perceived lack of innovation and staleness of its products pressures shares. Shares have fallen 19.5% year to date, and 37% since Apple unveiled the iPhone 5 in late September. The general consensus is that Apple needs to innovate, particularly on the iPhone, perhaps with a bigger screen, more colors, and perhaps a cheaper iPhone to win customers.

Piecyk based his upgrade in part on his expectations that Apple will release a bigger iPhone, as well as a lower-priced iPhone for emerging markets. There is also additional revenue for 2014 due to an unspecified product, which Piecyk believes can add as much as $5 billion in revenue. Apple has been rumored in recent months to be releasing an iWatch, , which may coincide with these revenue statistics.