Research Firms Can't Get Enough Of AAPL

While shares of Apple have climbed more than 10 percent this week, reaching 52-week highs, two research firms told investors Friday they continue to remain highly bullish about the stock.

Merrill Lynch reiterated its "Buy" rating on Apple, saying it has heard the company is performing well in the higher education market "based on the iPod halo effect, Unix operating system, and brand recognition." Merrill Lynch also said European music store sales and international iPod sales could provide a substantial boost to the companyis bottom line.

Piper Jaffray, meanwhile, sees the iTunes Music Store could be the key to Appleis continued growth in 2005 and 2006. "We believe that the Street is underestimating the impact of iTunes on two levels: hype factor and financials," the firm said. "Based on Apple itself downplaying the potential growth and profitability of the iTunes Music Store, we believe expectations related to this segment are minimal."

Piper believes that the hype factor surrounding iTunes will grow in tandem with the installed base of iPods. "As the iPod installed base grows and the overall demand for digitally distributed content increases, we expect the Street to begin to view iTunes as more than just the cog in a wheel that drives hardware sales," it said.

Shares of Apple were trading down a few cents ahead of the opening bell Friday.