Apple was downgraded on Monday at R.W. Baird, where the senior equity analyst responsible for the rating just isn't convinced that consensus estimates are correct.
"We think there is a real downside to estimates, and it's going to be tough for the stock to outperform over the next several months," said Will Power, whose firm downgraded Apple to "neutral" from "outperform" with a price target of $465, well under the current consensus price target of $627.72.
Power, in an interview on CNBC's "Squawk on the Street," said it's been difficult to "separate the stock from the company." He expects "over the next several quarters there will be further risk to downside risk to estimates."
Power said estimates on earnings are too close to the high end of guidance, and he is especially concerned that the street is being too optimistic for the June quarter because analysts are underestimating the effect of summer's traditional seasonal decline.
"In an environment where estimates will continue to fall, it's going to make it tough for the stock to work," he said.
In a note to clients, Baird said Apple warrants investor caution in the near term and that the consensus estimates "remain frustratingly too high."
"With estimates likely to fall further and gross margin concerns likely to linger, we believe the shares could drop further, despite the sharp sell-off and valuation," said the note, although Baird remains positive about Apple's products.
Despite many investors piling on to Apple on the downside, some market pros see it as a buy at the current level, both from a fundamental and technical perspective. Eighteen Wall Street analysts listed Apple as a "strong buy" and 26 as a "buy" out of 57 covering the stock, according to data from Thomson Reuters.
Only two listed the company as "underperform" and one as a "sell." Ten recommended "hold."
After its disappointing earnings report last week, Apple lost its place as the world's most valuable company to ExxonMobil. The report helped drive Apple''s stock to 52-week lows after a historic runup over the past several years. CNBC's Jim Cramer said he thought the market reaction was "unfair."
Power said the high average selling price of the iPhone had been a positive for Apple, but investor pressure to release a lower-price model could signal "another downward leg to the story, offsetting some long-term positives."
However, he said a game-changer such as an Apple television or another major product could "throw a wrench into the equation" and reverse negative evaluations like his.
"As we look at the products and the trajectory as it stands today, we're concerned that consensus estimates are still too high," said Power.
Disclosure information was not immediately available.