Apple stock drops as two analysts cut ratings
Posted by Dennis Sellers 
Sep 29, 2008 at 9:02pm
Apple shares are down sharply Monday morning—the lowest level in two years—after analysts at RBC Capital and Morgan Stanley cut their ratings on the stock, reports Barron’s.
RBC Capital’s Mike Abramsky cut his rating on the stock to Sector Perform from Outperform. His price target on the shares is now $140, down from $200. He cut his Fiscal Year (FY) 2008 Earnings Per Share (EPS) estimate to $5.26, from $5.28; for 2009 he goes to $5.75 from $6.07; for FY 2010 he’s now at $7.38, down from $8.03.
Abramsky says his new more cautious stance reflects “a worsening consumer spending environment.” He says a recent survey RBC conducted with research firm ChangeWave found a drop in the number of consumers intending to buy Macs: 29 percent intend to buy Mac laptops in the next 90 days, down from 34 percent in August, while 26 percent intend to buy a Mac desktop, down from 30 percent.
Morgan Stanley’s Kathryn Huberty cut her rating on the stock to Equal Weight from Overweight; her target drops to $115 from $178. Her estimates drop to $5.47 from $5.91 for fiscal 2009, and to $6.92 from $8.07 for FY 2010. She says that personal computer unit growth is decelerating and the remaining source of growth is increasingly the sub-$1,000 market where Apple “doesn’t play.” The analyst says that, even in the best of scenarios, Apple’s EPS growth will decelerate meaningfully from June quarter levels. She adds that “multiples for high growth stocks will continue to compress in the current environment,” and that with her new FY ‘09 EPS estimate suggesting growth of just six percent, “we don’t believe AAPL is immune to this trend.”
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Dennis Sellers
Dennis has been a newspaper editor/reporter (seven years) and teacher (seven years). He has over 4,000 magazine, newspaper and online articles to his credit. He has also covered the Mac and tech industries for over a decade for such online publications as MacCentral, MacMinute and now MacsimumNews.
