“While much of the tech sector has struggled during the last quarter, Apple Inc. has seen its shares quietly rise more than 45% over the last two months as anticipation grows over the company’s second fiscal quarter earnings report, which is due Wednesday,” Rex Crum reports for MarketWatch.
“The run-up was enough for American Technology Research analyst Shaw Wu, who cut his rating on Apple’s stock to neutral Tuesday morning after holding a bullish view on the shares for nearly three years,” Crum reports
“‘This was a very tough decision as we have been bullish on Apple for the past several years,’ Wu wrote in a note to clients, adding that the stock has more than tripled in that time,” Crum reports. “The move seemed to cool some of the enthusiasm around the stock. Shares of Apple slid more than 5% by midday.”
“In his report, Wu said he believes Apple will beat Wall Street analysts’ estimates of a profit of $1.07 a share on $6.97 billion in sales for the quarter. Wu actually expects Apple to earn between $1.25 and $1.30 a share on revenue between $7.1 billion and $7.2 billion,” Crum reports. “Driving the quarter will be strong sales of Macintosh computers while iPhone sales could also be better than expected, Wu said. He also expects sales of 10 million iPods, which is roughly in line with most other estimates. But he believes expectations have gotten to high for Apple’s shares to have additional upside.”
“Wu’s call stands out on Wall Street, where the vast majority of analysts covering Apple retain bullish views on the stock,” Crum reports. “Out of 29 analysts covering Apple, 24 rate the shares as a buy while only four – including Wu – carry neutral ratings, according to data from Thomson Financial. One broker maintains a sell call on the shares.”
MacDailyNews Note: Please see: Morgan Keegan downgrades Apple to ‘underperform’ – April 08, 2008
“Wu believes that the risk and reward benefit from the stock is ‘not that compelling’ anymore,” Crum reports. “‘[The] shares are no longer inexpensive,’ Wu said.”
More in the full article here.