E-Commerce News: Wall Street: Downgrade Dings Apple Shares Ahead of Earnings Report

American Technology Research analyst Shaw Wu backed off on Apple stock Tuesday, downgrading his rating from "Buy" to "Neutral," citing supply chain stress and expectations that he sees running too high. Shares fell 4.7 percent. The company is scheduled to post its quarterly earnings late Wednesday.

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Apple's (Nasdaq: AAPL) shares fell Tuesday after an American Technology Research analyst lowered his rating for the computer and gadget maker to "Neutral" ahead of the company's fiscal second-quarter report.

Apple shares fell US$7.96, or 4.7 percent, to $160.20. In the past year, the stock has traded between $91.30 and $202.96.

Great Expectations

In a client note, American Technology analyst Shaw Wu cut his rating from "Buy," noting concerns such as the shares' valuation, the possibility that expectations are for Apple's fiscal second quarter are too high and the likelihood of stress on its product supply in the June quarter due to the timing of new product releases.

Apple is scheduled to give its second-quarter report Wednesday.

Wu, who has previously been bullish on the stock, said the shares are no longer inexpensive and are close to his $175 price target. He also noted that Apple's stock has recently risen more than 45 percent, which makes him think second-quarter expectations may be too high.

Ups and Downs

Indeed, after hitting an all-time high of $202.96 in December and subsequently trading as low as $115.87 in February, the stock began to climb again, closing Monday at $168.16 after rising as high as $168.50 during trading.

"While we believe Apple will report a strong quarter relative to guidance and published consensus estimates, we are concerned whether it will be good enough and whether investors will be as forgiving with conservative guidance," he said.

The analyst said that the stock's dramatic moves also indicate investors are more focused on the company's near-term results, which could lead the stock to fall from current levels in the coming months as focus shifts once more to future performance .

Stressful June

Wu added that while he feels positive about the potential that Apple will have a strong product rollout in the second half of the year, he is concerned about a possible product vacuum before then.

"Our supply chain checks indicate 3G iPhones will not likely ship in volume until July and new Macs until the September quarter, likely putting stress on the June quarter," he said.

Analysts generally expect Apple will release a 3G, or third-generation, iPhone in the near future.