Apple's share price dropped more than 6% this week following a soft second-quarter result and weaker than expected guidance for the present quarter.
Craigs Investment Partners broker Chris Timms said investor sentiment was likely to remain low in the near term given uncertainty about the company's ability to return to growth.
"While a return to growth over the short term is unlikely, we believe the launch of the iPhone 7 later this year, and further expansion into emerging markets, particularly India, will help the company return to growth over the medium to long-term.''
Key points from the release included Apple's revenue of $US50.6billion ($NZ73billion) being down 12.8% on the previous corresponding period (pcp), slightly below market expectations of $US52billion, he said.
Earnings per share (eps) were $US1.90, down 18.4% on the pcp, missing market expectations of $US2.
Gross margins of 39.4% were at the high end of Apple's guidance range and in line with expectations.
All regions, with the exception of Japan, which reported growth of 23.8%, reported falls in revenue due mainly to a tough comparative period, Mr Timms said.
About 51.2million iPhones were sold during the quarter.
That was well below the 61.2million sold in the pcp when iPhone sales grew by 40%, but ahead of market expectations of 50.3million.
The average selling price for the iPhone was $US642, down 2.6% for the year.
Revenue for other products was "very good'' with growth of 29.6% driven by the Apple Watch, Mr Timms said.
Apple ended the quarter with $US232.9 billion in cash and marketable securities, 90% of which was held overseas.
The company was increasing its quarterly dividend to US57c per share, an increase of 9.6%.
It was spending $US7 billion on share buy-backs.
Apple provided its own view on why its guidance was below market expectations, Mr Timms said.
The company had decided to reduce its inventory levels by $US2 billion to account for weak economic conditions affecting iPhone demand and to prepare for the release of the iPhone 7.
The previous year's average selling price of the iPhone - driven up by the huge success of the iPhone 6S and 6S plus - was not sustainable.
"Management expected the average selling price to decline over the coming quarters as the company's latest, and least expensive iPhone product, the iPhone SE, enters the mix.''
Lastly, Apple did not expect to be able to grow Mac sales at the levels seen in previous years, he said.
The question going through every investor's mind was whether Apple could grow iPhone sales again.
It would be particularly difficult to achieve over the next couple of quarters due to the strong growth produced in previous quarters.
It would also get more difficult given the high-end smartphone market was reaching saturation point, as most people willing to buy a high-end smartphone had already bought one, Mr Timms said.
Apple's approach was to broaden its total addressable market by targeting less mature markets.
"In our view, Apple has huge market growth potential in emerging markets. Industry checks indicate that in counties such as India, China and Vietnam, smartphones selling for under $US400 make up 80% of the market.''
That was the "perfect'' target market for the company's iPhone SE and its older iPhone models, which had received price cuts as models had been released, he said.
Although it would hurt the company's average selling price, it offered significant volume growth.
Apple remained a quality tech stock with a growing range of products and services.
The company had strong margins, an unmatched cash hoard and relatively recurring revenue streams from users upgrading to new versions of devices, Mr Timms said.
Apple did face strong competition from other device manufacturers such as Samsung, Lenovo and LG.
However, the Apple ecosystem generated strong brand loyalty.
Purchasing one Apple product was likely to lead to purchases of additional devices, accessories and services.
"We believe the company is only starting to make progress in software and services and that these advances will help grown and monetise its large customer base.''
