AmTech downgrades Apple shares to Neutral on valuation

Published: 10:00 AM EST

Investment firm American Technology Research on Tuesday cut its long-standing Buy rating on shares of Apple Inc. to Neutral, citing near-term concerns with the stock's valuation, high expectations on the part of investors, and a potential product vacuum ahead of the third calendar quarter.

"We are downgrading our rating on Apple shares to Neutral from Buy for four key reasons," analyst Shaw Wu wrote in a note to investors. "This was a very tough decision as we have been bullish on Apple for the past several years, watching the stock more than triple."

Specifically, Wu noted that shares are now trading at 32 times calendar year 2008 earnings and near his previously stated $175 price target. These levels are "not that compelling," he said, and warned of the potential for a 15 to 20 percent correction in the near term that could see the shares fall back to $135 to $140 levels.