Analyst firm Smith Barney has upgraded Apple to a buy rating, with the expectation that Apple's stock has the potential to rise 19 per cent in the next year.

According to CBS MarketWatch, Smith Barney analyst Richard Gardner says Apple's stock could rise to $37 in twelve months – a 19 per cent gain on Friday's closing price of $31.08.

This follows a dip in Apple's share price after its admission that there will be a temporary iMac drought, with new iMacs not expected until September. Analysts at Needham & Co. also recognise this as representing a buying opportunity for Apple stock.

Although Apple stock fell $1.22 (3.8 per cent) on Friday following the announcement, Gardner still expects Apple to post fiscal third-quarter and fourth-quarter earnings in line with the current average analyst forecasts. He also expects "fiscal first-quarter earnings and revenue to significantly exceed projections."

Gardner believes the iMac delay is a "temporary issue". He wrote to clients saying: "We would be aggressive buyers on Friday's weakness. We view the third calendar-quarter's iMac product-transition issues as non-recurring and believe they present an attractive buying opportunity."

He also sees several other positive catalysts for the stock, including the launch of its mini iPod in Europe in July, data updates from the launch of iTunes in Europe and volume shipments of the new PowerMac G5 in the third quarter.

However, Merrill Lynch's Steven Milunovich cut his third-quarter estimates for Apple, saying the delay would "take some wind out of the stock's sails."

Analysts surveyed by Thomson First Call expect fiscal third-quarter earnings of 15 cents a share, fourth-quarter profit of 17 cents, and first-quarter earnings of 26 cents and revenue of $2.37 billion.