Prudential Equity Group downgrades Apple Computer on recent stock appreciation

Apple Computer has been downgraded to “neutral-weight” from “overweight” by Prudential Equity Group, citing the recent stock appreciation. Shares are currently trading around $60.92 in pre-market NASDAQ trading after closing at a new all-time high of $61.85 yesterday.

The Associated Press reports, “Prudential told clients it expects a strong first quarter and fiscal 2006, but said it believes the stock has now fully discounted this reality. ‘High expectations and still considerable froth add to risk profile, in our view,’ Prudential said.”

Full article here.

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This downgrade tempers Apple’s recent hot streak into record share price territory and may help to provide some sort of buying opportunity for those looking to squeeze in under $60.

Related articles:
First Albany raises Apple target to $66, expects 9 million iPods next quarter – November 03, 2005
Apple Computer shares crack $60 mark, hit new all-time high in morning trading – November 03, 2005


  1. Prudential doesn’t realize that once again this Christmas, THE gift will be an iPod and every one wants one…that’s alot of iPods my friend..not to mention that halo effect that seems to be so playing out also..Apple stock will do just what it did last year. I was the first to say last year at this time that Apple stock would go to a hundred, split and then double again…I hate it when I’m right

  2. This kind of downgrade isn’t that bad. It’s saying the stock has done really well and it’s at the point we think it should be.

    Doesn’t say anything negative about the company, the product etc.

    Eitherway, AAPL is going to take a hit. (maybe give back part or most of yesterday’s gains).

  3. Prudential is a company looking for relevance. With everyone else predicting upside, why not buck the trend and predict a little gloom. What have they got to lose? If they can spark a sell off then they can sell some holdings short and make some dough. Smart or Stupid?

    MW: clearly (clearly, I’m not selling my AAPL)

  4. I agree– things are improving. I just got word this morning that 3 more of my friends want to buy Macs.

    I’ve said it before and I saw it printred somewhere yesterday– Apple remains strong compared to other companies. because of that, it’s a safer bet for investors than other stocks.

    Prudential is being caution/prudent, or they might otherwise be called Adventure…um…ential. ” width=”19″ height=”19″ alt=”raspberry” style=”border:0;” />

  5. Of course, we all know Prudential has a poor track record of telling the truth. I was in a class action lawsuit against them, when they lied to me about the nature of my insurance policy. Promised me it was a retirement plan when it was actually a whole life policy.

    Got all my money back, but that’s it. The lawyers got hundreds of millions. Screwed both ways.

    The magic word is, appropiratrely, “never.”

  6. Investor is correct. This is not a negative report. It is merely a recommendation that the stock is not currently a “buy.” As for first poster, maybe you’re right, though somehow I doubt you were the first to say the stock would go to hundred and split, and then double again. The reality is that these analysts are not as stupid as you make them out to be. The current price, including the “froth,” does appear to take into account the looming holiday season; in fact, every analyst betting on Apple maintaining or even improving the current price, is betting on the holiday season. But I disagree with MDN’s take here; this isn’t a specific buying opportunity, unless you’re a “day” investor with a few hundred grand looking for a quick flip. I believe–as do many over at TMO [see here: –that]]–that Apple stock is a long-term play. So I’ve been buying since it was $9 years ago. My last purchase was at $51 a couple of weeks ago. I think that the holiday season, MacWorld, and the Intel switch all have even more upside built into them. Part of that comes from rational analysis, and some comes from Apple fervor. I don’t really fault analysts for not having Apple fervor. They don’t get paid to build up hope.

  7. yes, entirely a reasonable valuation-based recommendation, but the analyst is using a “by-the-numbers” approach to AAPL. if you recognize the high impact synergies going on — the halo effect, creating a revolution in distribution of broadcast media, etc. — then it is much harder to say AAPL is priced to perfection. just got my new video-enabled iPod yesterday and all i can say is wow — amazing. also got my second 30-inch display (bought from proceeds from trading AAPL options, and an excellent tool for displaying my trading desk) and it all looks and works beautifully.

    i sincerely thank the analyst at prudential for creating a sale (3% off, get it while it’s hot) in AAPL — i’m reloading up on nov/dec call options. i kiss you steven fortuna.

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