The Mac Observer

Skip navigational links

DealsOnTheWeb Daily Deal: OneCall's Weekend Sale - 20 Great Items at Great Prices All Weekend Long

ATR Downgrades AAPL Over Valuation Concerns

by , 11:10 AM EDT, April 22nd, 2008

American Technology Research analyst Shaw Wu downgraded his "Buy" rating for Apple's stock to "Neutral" on Tuesday citing concerns over the company's high valuation, high investor expectations, and potential "product vacuum" before the third calendar quarter in 2008. His downgrade comes a day before Apple announces its second quarter earnings.

"We are downgrading our rating on AAPL shares to Neutral from Buy for four key reasons," Mr. Wu said. "This was a very tough decision as we have been bullish on Apple for the past several years, watching the stock more than triple."

According to Mr. Wu, the risk/reward for Apple's stock at its current levels in not compelling, and there is little potential for appreciation since it is within about four percent of his US$175 target price. He added "We see potential downside risk to $135 to $140 -- a correction of 15 to 20 percent."

Following Apple's 45 percent rebound over the past few weeks, Mr. Wu feels investors may be expecting too much from the Mac and iPod maker. "While we believe Apple will report a strong quarter relative to guidance and published consensus estimates, we are concerned whether it will be good enough and whether investors will be as forgiving with conservative guidance," he said.

While Mr. Wu is anticipating strong product roll outs in the second half of 2008, he is worried that there might be a lull leading up to the new launches. According to his supply chain checks, the 3G iPhone won't likely ship in volume until July, and new Macs won't appear until the September quarter, leaving the June quarter without much to show for new products.

Apple's stock also seems to be driven by investor focus on near-term investing, according to Mr. Wu. That volatility has left him reticent to recommend purchases at the stock's current levels.

"While we maintain our longer-term fundamental positive view on Apple, from a stock perspective, we find it difficult to recommend purchasing at current levels," he said. "The reality is that AAPL shares are very volatile and trading action suggests investor focus on near-term results. Arguably, shares should not have hit as low as $115 and as high as $168 in such a short period of seven weeks, but it has."

Mr. Wu is maintaining his $175 target price for Apple's stock. Apple is currently trading at $162.76, down 5.40 (3.21%).


If you are interested in Apple's stock, join our forum members in the Apple Finance Boards, a moderated forum for Apple Investors and people who are interested in Apple's financial dealings. For other stories regarding Apple's stock activity, visit our updated Apple Stock Watch Special Report.

Observer Comments

Show: Subjects Only | Full Comments
Close Name:Intruder -   TMO Mac Specialist Posts: 2922 Joined: 07 Jul 2004
Subject:

1. Tell folks that you are concerned about Apple, even though they have given no reasons to be concerned;

2. Cause panic selling

3. Buy at the lower price point

4. Profit!

Comment on this Article


You cannot edit your comments.   You cannot delete your comments.
Log in | Register | Having Problems? Reset TMO Cookies & Try Again
Username:   Password:   Log me on automatically each visit   

You are not logged in, and this post will appear as "Guest." Log in with your username and password from the TMO forums. If you do not have a username, you can register here.
Please note that guests are limited to including a maximum of two URLs per post.


Post A Comment
  Subject


  Your Comments



Please enter the word exactly as you see it in the image above. Registered users aren't prompted for this. Having trouble reading the image get a new one.


Recent Headlines - Updated Friday, July 4th, 2008

Fri., 7:30 AM
Happy Fourth of July!
Thu., 4:50 PM
Apple Slashes $400 from SSD Drive in MacBook Air
4:05 PM
It's Official - Firefox Sets Guinness Record for Downloads
3:30 PM
Apple Files Patent for a Multi-touch Gesture Language
2:20 PM
Editorial - Mac's Market Share and the Cascade Failure of Windows
1:35 PM
iPodObserver - Apple Slurps Up Samsung's NAND Flash for iPhone 3G
1:05 PM
WSJ: Tips for Switching from Windows to Mac
12:05 PM
iPodObserver - Google Intros Google Talk for iPhone
11:35 AM
iPO Just a Thought - iPod nano Versus iPhone: Decisons, Decisions...
10:55 AM
YouTube Ordered to Turn Over All User Records to Viacom
10:10 AM
Hot Forum Topic - Apple vs. Cell Carriers: Who's Winning the Game
9:25 AM
iPodObserver - Rumor: Best Buy, Radio Shack to Sell iPhone 3G
8:45 AM
.Mac Bookmark Sync Deadline Extended to July 6
8:10 AM
Adobe Reader 9 Hits the Streets
 

The Mac Observer Reader Specials

  • Download Typestyler, still the Ultimate Styling Tool for Internet, Print and Video Graphics. Works great in Classic with a Native OS X Version on the way. Free Tryout: www.typestyler.com
  • OWC: Mercury Elite FW800/FW400/USB2/eSATA up to 2.0TB TOP-RATED Solutions offer High Performance, Reliable storage for all your data storage needs. 500GB $159.99, 750GB $199.99, 1.0TB from $299.99
  • MacPro Memory 667Mhz With Apple Spec Heat Sink 2GB $90 / 4GB $134 / 8GB $264. Click to Maximize your Macs...
  • Mac observers can now play Party Poker for Mac as well as Mac casino games by going to MacPokerOnline.com.
  • RamJet Memory: MacBook 1Gig $39, 2Gig $78, 4Gig $195! Mac Pro 2Gig $115, 4Gig $189! 500G Seagate SATA II $139! Click here
  • For the latest Apple products use Ciao a comparison website to find laptops like MacBook Air. Then find the best prices on MP3 players and use our comparison tool to evaluate cell phones.

  • Laptop Hardware Provided by TechRestore - Overnight Mac & iPod Repairs.
  • Special Report: WWDC 2008
  • Special Report: iPhone
  • __________
  • Help TMO Grow
  • Podcast: Mac Geek Gab
  • Podcast: Apple Weekly Report
  • TMO on Twitter!
  • New Media Expo 2008

Apple Stock Quote

  • AAPL: $170.12. Change Today: +1.94.
  • (Prices delayed up to 20 minutes.)
  • Discuss in our Apple Finance Board

Hot Topics

Top Deals From DealsOnTheWeb