By Eileen Soreng and Lehar Maan
(Reuters) - Forget that iPhone unit sales were not as strong as many had expected; that the revenue forecast fell short of the average estimate, and that there was no clarity on Apple Watch sales.
Analysts, for the most part, remain as upbeat as ever on Apple Inc (O:AAPL) after investors knocked more than $65 billion off the company's market value in initial reaction to the company's quarterly results on Tuesday.
Only one of 20 brokerages that issued reports assessing Apple's earnings cut its rating on the stock. Of the rest, 15 kept their "buy" or equivalent rating and four a "hold".
"We believe Apple's future prospects have never been brighter," Cantor Fitzgerald analyst Brian White said in a research note, maintaining his "buy" rating.
Investors remained wary, however.
Apple shares, which have risen almost 19 percent this year, closed down 4.3 percent at $125.14 on Wednesday, the stock's biggest intra-day percentage fall since December 2014.
"As Apple has become the 'gold standard' of technology, it is held to a higher standard," said FBR analyst Daniel Ives, who described the iPhone maker's quarter as "good but not great."
Most analysts looked beyond the immediate disappointment.
"With a new iPhone around the corner, the seasonally stronger quarters ahead and a possible Apple TV update, coupled with valuation, we would be buyers on weakness," said analysts at Robert W. Baird, who rate the stock "outperform".
J.P. Morgan's Rod Hall was among those who said the stock's fall had been overdone, noting among other things the better-than-expected average selling prices for iPhones in the quarter.
RISE OF THE MIDDLE CLASS
Growth in emerging markets such as China and India, where many believe Apple is likely to take market share from Android, is key a reason for optimism, analysts said.
"We believe the company is positioned to exploit the rise of the middle class in these geographies over the next several years," William Blair analyst Anile Doral, who has an "outperform" rating on Apple, wrote in a client note.
Apple's iPhone sales in China more than doubled in the quarter to $13.23 billion.
Total iPhone sales rose 35 percent to 47.5 million.
While that fell short of the 49 million many analysts had expected, NBC's Mark Mahoney noted that only 27 percent of iPhone users had migrated to iPhone 6.
This, he said, suggested the iPhone 6s refresh cycle will benefit the tail end of the September quarter and drive growth.
Piper Jaffrey's Gene Munster also noted that growth in iPhone sales had outstripped overall market growth, which he said was in the low teens.
Munster raised target price on the stock by 6 percent to $172, while maintaining "overweight" rating.
Of 48 analysts covering Apple, 16 have "strong buy" rating, 21 a "buy," 10 a "hold" and one a "sell", according to Thomson Reuters data. The median target price is $150.
Only Cowen & Co analyst Timothy Arcuri downgraded Apple on Wednesday - to "market perform" from "outperform".
Despite rising 40 percent in the past year, Apple's stock still trades at a significant discount to that of tech peers such as Google Inc (O:GOOGL) and Microsoft Corp (O:MSFT).
As well, the stock's current price-to-earnings multiple of 13.7 is well below its 10-year historical median of 16.2. Google trades at 22 times forward earnings, and Microsoft at 17 times.