By Katie Marsal

Published: 01:20 PM EST

Shares of Apple Inc. received a slight boost Monday morning after investment bank Citigroup added the company to its "Top Picks Live" list and reiterated a Buy rating on the badly beaten stock.

"Top Picks Live is a dynamic list of CIR’s highest conviction ideas through calendar year-end which was introduced in January 2008," analyst Rich Gardner explained in a research note to clients. "Apple is the first addition to the list by the PC & Enterprise Hardware team."

In his note, Gardner vouched his belief that the affects of much publicized first-quarter iPhone and iPod production cuts (1, 2) are already reflected in the company's share price, which has fallen some 37 percent since the start of the new year.

"Several sell side analysts have recently cited cuts to March quarter build plans for both iPod and iPhone," he wrote. "We believe that these cuts did occur and that March quarter iPod and iPhone build plans are both below the current sell-side consensus."

For the quarter, the analyst said checks now suggest an iPod build plan of 9 million units will ultimately lead to sales of 10 million revenue units, slightly below sell-side consensus estimates of 10.9 million units. Similarly, iPhone build plan checks imply 1.0 to 1.2 million units, about half a million units shy of the 1.7 million sell-side consensus estimates.

"While March quarter iPod and iPhone build plans are below sell-side consensus numbers, we believe that this is well understood and expected by the buy-side," Gardner said in supporting his Buy recommendation. "At this point, we do not believe 10 million iPod revenue units and 1-1.5 million iPhone units during the March quarter would constitute a surprise to investors. In addition, we believe that iTunes movie rentals will provide an incentive for current iPod users to upgrade to a video-capable iPod as rental content on the site grows throughout the year."

The analyst blames most of the iPod's perceived under-performance in the US market as of late on poor uptake of the the entry level iPod shuffle, which hasn't seen a material revision in well over a year.

"While virtually 100 percent of the unit shortfall was in the low-end iPod Shuffle, allowing Apple to beat consensus iPod revenue despite the unit shortfall, the Street was rightfully concerned about the lack of unit growth," he wrote. "We believe the unit shortfall reflected the lack of a compelling update to the Shuffle product last Fall; the Shuffle simply was not the compelling 'stocking stuffer' this year that it was last year."

Going forward, Gardner said Apple will have to provide compelling reasons for US iPod users to upgrade in order to keep the domestic business from declining. However, the analyst had a slightly different view of the company's scaled back iPhone orders.

"While iPhone shipments are likely to be weak during the March quarter, we believe this partly reflects channel inventory draw down ahead of the launch of a 3G iPhone within 1-1.5 quarters," he explained. "The introduction of 3G along with price cuts and additional carrier relationships in Europe should give investors increased confidence in Apple’s stated target of 10 million iPhone unit shipments during calendar year 2008.

Gardner holds $212 price target on shares of Apple.