Smith Barney Downgrades AAPL to Hold, Advises Profit Taking

Hot on the heels of other brokerages raising their target prices for Apple, which itself led to a major jump in the stock during the last two weeks, Smith Barney downgraded the company to "Hold" from "Buy," and is advising its clients to look for an opportunity to sell. reports that while the investment firm raised its own 12 month target for Apple to US$75 per share, it also advised its clients to use any short term strength in AAPL as an opportunity to take profits.


And while Smith Barney suggested profit-taking now, it raised its 12-month price target on the shares to $75, reflecting a 29 multiple applied to the 2006 earnings estimate, plus about $15.50 of net cash on Appleis balance sheet.

"Despite the fact that we are raising our target multiple on calendar 2006 operating earnings this morning from 26 times to 29 times, we cannot justify more than a $75 fair value in 12 months. And while this suggests another 10% upside from current levels, we can no longer recommend that medium- to long-term investors place new money into the shares," the brokerage wrote.

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Apple is currently trading at 66.06, down 1.73 (-2.55%), on strong volume of 9.2 million shares trading hands.

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