While Wall Street continue to issue sky-high price targets in excess of $1,000 on Apple (AAPL) shares last year, BTIG’s Walter Piecyk saw the writing on the wall in April and downgraded the stock to Neutral. Five months later, Apple shares took a spectacular dive and have yet to show any real signs of recovery. Piecyk seemingly now believes we’re at the bottom, however, as the analyst on Thursday upgraded Apple to Buy with a $540 target.

“We believe the stock is reflecting low buy-side investor expectations, even if the sell-side has not yet caught up with their estimate revisions,” Piecyk wrote in a research note. “Apple will also benefit from a reversal of the impacts of the tighter phone upgrade policies in the United States, its most important market, and is likely to come to a decision on its cash by the end of the month.”

BTIG sees a number of upcoming catalysts including the launch of a cheaper iPhone by the end of the year, which could contribute $11 billion to Apple’s fiscal 2014 revenue. “We believe a product that addresses the more than 70% of global wireless subscribers that are unsubsidized pre-paid is necessary in order for Apple to grow its EPS next year,” Piecyk said. He sees Apple selling 35 million units in fiscal 2014 at an average selling price of $300.

Piecyk also thinks Apple could be cooking up a larger iPhone. “We don’t pretend to understand what consumers want and have leaned heavily towards Steve Job’s belief that ‘consumers don’t know what they want until you show it to them,’ ” the analyst wrote. “But it’s undeniable that there is demand at the high-end (where all the profits are made) for a larger screen. A more material move in the size of the iPhone would generate a better upgrade cycle compared to the marginal change in size of the iPhone 5.”

Apple shares were trading up 1% on Piecyk’s upgrade during Thursday’s pre-market session.