Kasper JadeWhile acknowledging that Apple's execution has been "extraordinary," Merrill Lynch on Wednesday downgraded the company's stock from "Buy" to "Neutral," saying it sees more limited upside from this point forth.
"We believe iPod penetration into the consumer PC installed base can go higher than the current estimated 16% but worry the stock appears to be pricing in penetration closer to 40% around 2007" analyst Richard Farmer wrote in a research note obtained by AppleInsider. He believes this figure to be reasonable but unlikely to be exceeded.
Farmer also waved caution at the upcoming Intel transition and launch of Microsoft's Vista operating system, two events that could possible hold back buyers and prevent Mac market share gains.
"When everyone knows everything is going right for a company, sentiment is hard to improve," wrote Farmer.
The downgrade on Apple is the first in many months, as the iPod maker's stock has recently become a Wall Street favorite, trading at all-time highs.
Shares of Apple traded down some 4.42% or $2.36 this afternoon to close at $51.08.
Marko Zivkovic
Wesley Hilliard
Malcolm Owen
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34 Comments
Idiot!
The Intel transition will only help Apple's market share. Early reactions to Vista are a giant BFD. It's well-known that Vista is not much different from XP and is still plagued by The Registry, the playground of malware authors.
And as the buyers of new iPods levels off, veteran iPod owners will be buying replacement iPods, whether it is because their first ones broke or they like the new features on new models.
Stupid shallow analysis. Richard Farmer ought to pay attention to his name and hop on a tractor instead of slandering Apple.
If they don't see much upside potential for Apple, what did ML do for Microsoft?
It actually sounds pretty spot on. Apple will keep sell a lot of iPods but the huge growth will not continue. Only do I not think Vista will mean anything negative for the success of Apple.
Notice what ML is saying is that the current stock price reflects a very optimistic picture of Apples situation in 2007. To justify a higher stock price Apple has to exceed this optimism (the 40% figure for the iPod). And the stock is still in its low 50s. ML is predicting a growth up to the high 50s.
Apple is going to take a huge bite out of the Windows World when throngs of tired Dell owners buy Powerebooks in the next few years. Almost every person I know is buying a Mac as their next computer. If Ipod sales slow, it won't matter, because people are gonna be buyin computers like crazy. Also, I still know quite a few people who don't have an Ipod yet, and i get the feelin they're cruisin for a bruisin. (By which i mean they're gonna buy one)
Idiot!
The Intel transition will only help Apple's market share. Early reactions to Vista are a giant BFD. It's well-known that Vista is not much different from XP and is still plagued by The Registry, the playground of malware authors.
And as the buyers of new iPods levels off, veteran iPod owners will be buying replacement iPods, whether it is because their first ones broke or they like the new features on new models.
Stupid shallow analysis. Richard Farmer ought to pay attention to his name and hop on a tractor instead of slandering Apple.
A little harsh perhaps.
Many, many people will buy Vista.
Many, many people will rave about Vista.
Whether it's amazing or atrocious it will get big sales.
And (hopefully temporarily) everyone(i.e. general population) will be wanting it.
It will have an effect. Hopefully not for long.
Also they changed to 'neutral', not to 'sell'.
I bought an eMac 3 years ago. If I had spent the money on shares i'd have almost quadrupled my money if not better.
They can't keep going at the same rate. We've seen all the 'fantastic' growth we're gonna get for a while.
If you haven't invested in Apple by now I wouldn't recommend it.
Geek knowledge does not always convert to sound financial practice.