Apple has a new fan on Wall Street - and this analyst says the company's cash position and product innovation could drive a 14% gain in the stock over the next year

• Apple got a new supporter on Wall Street on Wednesday, as RBC Capital Markets analyst Robert Muller initiated coverage of the iPhone maker.
• Muller gave Apple an "outperform" rating and $295 price target, representing about a 14% premium from where shares traded on Wednesday.
• The analyst views the company's ability to return cash flow to shareholders and its continued product innovations as the primary drivers of long-term value.
• Watch Apple trade live on Markets Insider.

Apple's chorus of Wall Street bulls just got a little bigger.

RBC Capital Markets analysts Robert Muller initiated coverage of the iPhone maker on Wednesday with an "outperform" rating and $295 price target, the third highest on Wall Street. Muller's price target represents around 14% upside from where Apple's shares traded on Wednesday morning.

"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," Muller wrote in a note to clients.

Muller sees long-term value in Apple's product innovation and expected launch of a 5G iPhone in 2021, which could create a "super-upgrade cycle," he said.

Apple's declining iPhone sales has been one of the biggest talking points for bearish investors and analysts in recent quarters. Muller said despite the extended life cycle of Apple's more recent phones, he doesn't expect smartphone penetration to fall.

In an effort to make up for lost iPhone sales, the company has also expanded its assortment of hardware products to include the Apple Watch and AirPods. Apple also released a new 16-inch MacBook Pro on Wednesday with an improved keyboard, screen, and audio system.

"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," Muller said.

Muller also cited Apple's massive billion cash pile, strong balance sheet, and history of share buybacks as support for his rating.

"At present, AAPL has ~$100BN of net cash on hand. With management's intention to achieve a cash-neutral position, we expect the majority of that amount to return to investors via buybacks," he added.

Apple's stock price is up more than 66% year-to-date.