The firm also highlighted Adobe and Avid as its other top picks. The three companies were chosen because they have healthy consumer bases and are likely to benefit from new product introductions and identifiable changes in their respective industries.
"Why, despite the run in Apple, are we highlighting the name as a top pick?," analyst Gene Munster wrote in a research note released on Wednesday. "Investors believe the easy money has been made, but we see more upside potential in Apple's business, and sentiment suggesting that growth has peaked leads us to believe that Apple shares will respond positively to any outperformance."
While Munster does not expect to see a slowdown of new and updated iPods in 2006, he believes a more important story will be the evolution of the Macintosh line in the new year. The analyst expects the move to Intel processors and the need for new Mac form factors to lead to the launch of several new and updated models that will generate consumer interest.
Commenting on Adobe, Munster said the company's customer base -- which now includes that of Macromedia -- is as strong as he has seen it.
While the general consensus on the Street is that 2006 will be a slow product release year for Adobe, the analyst believes Adobe will benefit from the recently released Adobe/Macromedia bundled products, Acrobat 8 in late summer/early fall, sporadic releases of various new enterprise-level product combinations, and anticipation for a shipment of CS 3 in early 2007.
Of PiperJaffray's top three top picks, Munster said Avid likely has the highest risk profile, with more quarter-to-quarter volatility in results than either Adobe or Apple.
"That said, the company is in a leadership position in the markets for high definition post production and broadcast newsroom systems, both of which are in the midst of major multi-year industry upgrade cycles," the analyst wrote.
PiperJaffray maintains an "Outperform" rating on Apple shares with a target price of $80.