However, he added a caveat: “The risk in our downgrade is that the frenetic pace of innovation at Apple could present new opportunities, which could trigger an upgrade at a price thatis much higher than it is today.”
Mr. Wolf wrote in his research report that, beginning with Appleis introduction of the Mac mini this past January, the company has made a string of product announcements that have “translated into financial results that have easily beat most estimates.”
He added that, in his estimation, more than one million Windows users bought Macs during the first nine months of 2005, compared to his prediction at the beginning of the year that 500,000 would do so. “Clearly,” the analyst wrote, “the so-called halo is working. Windows users are also switching because of the growing epidemic of viruses infecting their PCs.”
Mr. Wolf also noted that Apple has seen growth in its stores, which he called “a frequently overlooked metric.” He said that Appleis 2005 fiscal year saw 46% growth in weekly visitors per store and a 45% increase in same-store sales.
The analystis bottom line is that his valuation analysis of Appleis stock “indicates that the current price captures the opportunities that are visible today. New products and innovative strategies from Apple should keep coming. However, we canit quantify them in our valuation model since we donit know what they are.”
At noon EST on Monday, Apple shares were selling for $60.45, down 1.14% for the day.
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