Standard & Poor cuts Apple target by $15 to $68

Analysts for Standard & Poor on Tuesday reduced their 12-month target price on Apple Computer shares to $68 from $83 to reflect a revised valuation analyses. "Specifically, our new target price is a blend of our discounted cash flow (DCF) and price-to-sales (P/S) metrics, and reflects a lower multiple on our fiscal year 2007 revenue estimate," said analyst Megan Graham-Hackett. She attributes the price cut to what her firm sees "as slowing sales related to maturing of the iPod and MP3 player market, and margin pressure as iPod becomes larger percent of Apple's sales mix." The analyst said she believes a P/S multiple of 2.5X is more reasonable than the current 3.3X. Standard & Poor made no changes to its fiscal 2006 and 2007 estimates, maintaining a "Hold" rating on Apple shares.