Analysts at American Technology Research, Needham & Co and Piper Jaffray have urged their clients not to bail on Apple's shares.
Charles Wolf of Needham & Co, Shaw Wu of American Technology Research and Gene Munster at Piper Jaffrray all predict a fast-paced series of product introductions from Apple this year.
Wolf calls Apple: "The most exciting story in our universe."
Wu describes the computer company as: "A big mean cash machine."
Looking forward, Munster predicted that Apple would see growth in both its iPod and Mac sales. "While 2005 was the year of iPod growth, we believe 2006 is poised to be the year of both iPod growth and, more importantly, Mac market share gains," he wrote.
Apple innovation to ramp-up
Wolf echoed the positive outlook: "If anything, the pace of new product introductions should accelerate in 2006 as Apple transitions to an all-Intel Mac lineup, continues to build out the iPod platform, and launches its long-anticipated invasion of the digital living room," he observed. Wolf raised his fiscal 2006 earnings per share estimate from $1.95 to $2.05 and the 2007 estimate from $2.40 to $2.50.
Many investors chose to sell their stock following Apple's financial news on Wednesday, they were scared that Apple is targeting revenue that's only the second-highest in the company's history, and got terrible jitters from the notion that Mac sales may slow slightly as products make the transition to Intel processors.
Pre-Intel slowdown real, but 'muted'
Munster said that Piper Jaffray's own research had revealed only a "muted" slowdown in Mac sales as consumers awaited new Intel Mac revelations at Macworld Expo San Francisco.
He proposed that Apple's current quarter will benefit from pent-up demand for the MacBook Pro when it ships in February, which will offset the financial impact of Mac users waiting for Intel versions of other Mac models.
The future is bright, the analysts agree. Wu calls Apple: "Well-positioned to continue above market growth rates with arguably the industry's most powerful and complete stack of hardware, software, and services."
He also said that in his opinion, it's well worth "buying Apple's stock on weakness".
Wolf cautioned against panic, explaining: "With iPod and music related sales representing a growing fraction of Apple's total revenues (59 per cent in the first quarter of 2006 compared to 41 per cent a year ago), seasonal fluctuations in revenues and earnings will inevitably increase."
Wolf predicts that iBooks will move to Intel this spring and expects Power Macs to grow Intel hearts during the summer. And he told investors: "The move to the Intel platform has the potential to materially increase Mac sales once the transition is completed."
Wolf put some fresh cards on the table. He "expects the actual video iPod" later this year - with a larger screen. He also said he: "Would not be surprised to see the Mac mini assume its rightful place in the living room as a digital entertainment server".
Wolf also considers an Apple mobile phone, possibly accompanied by an Apple-branded mobile carrier network to be likely, but not this year.
Wolf also predicts major content deals, and describes Microsoft's failure to make a mark in most homes. Microsoft, "insists on imposing an impossibly complex system on consumers," he said.
"Apple's represents a far better bet to succeed in its effort," he predicted.
However, not every analyst agrees. Those at Caris & Co., Banc of America and Prudential now assess Apple as a neutral stock on slightly reduced targets.
Banc of America holds an $85 target (down $2); However, despite maintaining a "neutral" on the stock, analysts at Prudential raised their target price to $80 from the previous conservative $67 target.