Citigroup/Gardner Advice: Hold That Apple Stock

Apple has been on a roll. Itis last earnings report sent the stock price over $100. Even so, Citigroup analyst Richard Gardner says the boom is over, and itis time to hold Apple stock.

Shaw Wu has been leading the analysts with a US$145 target price for Apple stock. On the other hand, Richard Gardner, a long time Apple observer with Citigroup, has been less enthusiastic according to Business Weekis Arik Hesseldahl.

The reason has to do with the details in Appleis last earning report form April 25th. Peter Oppenheimer pointed out that the commodity pricing on key computer parts is going up, and Appleis Gross Margins will go down. Even though Intel has lowered prices in its CPUs, Flash and DRAM memory prices are predicted to spike in June. Moreover, Mr. Gardner believes that all of the gains due to the Apple TV, iPods, and Macs are already built-in to the current stock price.

To make matters worse, Apple cited their fiscal third quarter (Apr-June) as a slow period for consumer sales. Thereis no holiday buying, no back to school buying (for consumers).

Then thereis the iPhone. Many have been predicting that a swell of consumer enthusiasm in June would send the stock up. But thereis just one small problem that Mr. Gardner has pointed out. In order to be able to provide updates to the iPhone without charge, Apple will have to amortize the earnings over a 24 month period, called subscription accounting. So Apple wonit see a swell in earnings for that device either.

As a result, Mr. Gardner, who has made some astute predictions in the past, has this advice, "Hold the Apple stock you have, but donit buy any more, for now."