Needham downgrades Apple from ‘buy’ to ‘hold’ based on valuation

Analyst Charles R. Wolf of Needham & Co has downgraded Apple Computer Inc (AAPL) from “buy” to “hold” this morning based on valuation.

In a research note published this morning, the analyst mentions that “Apple Computer’s share price has appreciated significantly over the past one year on account of the launch of new iPods and Macs, and the company’s robust financial results. The sales of the company’s Mac computers have been significantly higher than the estimates so far this year.”

Full article here.

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Related articles:
Prudential Equity Group downgrades Apple Computer on recent stock appreciation – November 04, 2005


  1. Rainy Day: You should buy a clue too.

    An overvaluation in stock can be very bad for a company too. None of these analysts are saying the stock or the company is bad or on the wrong track or even slowing down, but they’re protecting their investments as well. Apple has even been very conservative in it’s forward looking statements to keep its stock from developing too high expectations.

    Don’t be so short sighted.

  2. Needham downgrades Apple from ‘buy’ to ‘hold’ based on valuation

    You say tomahtoes, I say tomaytoes.

    UBS: Apple to unveil Intel-based Mac mini in January; AAPL share price target raised to $74

  3. Art_vandelay: Wolf doesn’t understand Apple nor its market very well… nor apparently do you, given your comments. Other analysts are raising their target on Apple.

    Although i will grant that Wolf is hedging this call (although you wouldn’t know it from the MDN take) saying that he may revise Apple upward in the not so distant future:

    This downgrade is being overly conservative, IMO, and without a real clue as to Apple’s market dynamics.

  4. For the past 3 years forward looking EPS has been a good predictor of AAPL share prices 30 to 90 days out. AAPL has been between 35 and 40 times forward looking EPS for almost all of that time. This simple analysis has made me a lot of money over that 3 years. Now UBS predicts 2006 EPS of $1.85. That translates into $64 to $74 in the near future for AAPL. This is an overriding fundamental as far as I am concerned. Wolf doesn’t understand the situation and because he doesn’t he’s basically saying that what goes up must come down. Sounds reasonable to the uninformed.

  5. Art, seriously, I’m surprised that you believe these jokers know any more than a red / black roulette wheel bet.

    These jokers have downgraded AAPL for the past several years. WTF do they know?

    These jokers can’t even beat the S&P 500 return for 10 years. What do they know? They’re salesmen.

    — I must add that the geniuses who manage massive funds such as Federal employee retirement funds are the real deal. How often are they moving out of AAPL, downgrading AAPL, or causing a stir? Almost never unless some real issues exist.

  6. From public information.

    Net short term assets $9.375 BILLION
    Net short term liabilities $3.145 billion

    The company Beta is 1.1
    Apple has no debt.

    It has $13.931 Billion in revenues

    Net Operating Profit margin is 4.63%

    Apple has a market cap of $50 Billion with about 828 million shares outstanding.

    How can the stock be overvalued?

    How are people comming up with a PE of 38? With last year’s revenues and the current stock price?

  7. This ship is just setting sail. People are *just beginning* to think Apple may be on to something. In truth Apple has been on to something since OS X, or more accurately since Steve Jobs came back. Wait until this thing really gets going. It’s gonna be big. MS has been screwing up since Ballmer, and some reckoning is in order. Drink the kool-aid, it tastes great.

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