Attention investors: beware falling prices! Apple's atomic stock price explosion couldn't last forever, and we've just gotten the first potential sign that the party might be over: an actual, honest-to-goodness analyst downgrade. That's right, folks, one of the suits on Wall Street is officially recommending that his clients not buy any more AAPL-- and shares subsequently dipped by a tough-to-ignore $2.58 in regular trading. Is this the beginning of the end?

Well, maybe, but to us it looks more like the end of the beginning. As far as downgrades go, Apple picked up just about the best one it could possibly dream of; according to CBS MarketWatch, Smith Barney's Richard Gardner "raised his 2005 and 2006 earnings estimates" for Apple by about an extra $68 million in sheer profit per year "due to the outlook for iPod and iMac sales," which he apparently expects to be rosy for the next two years at least. In addition, he bumped his price target on AAPL from the oh-so-passé $60 a share to a slightly less out-of-date $75. In other words, Gardner thinks Apple will be making more and more money for at least the next two years on strong demand for hot products, and expects the stock price to go up another ten bucks within a year. So heaven forbid that any of his clients actually buy any or anything.

Yes, despite all the happy talk about increased earnings, two years of growth, and a stock price that he still thinks will rise, Gardner has cut his rating on AAPL from "Buy" to "Hold," which constitutes the first analyst downgrade on the stock since September (and that one had been the first since January-- of last year). Which is odd on the face of it, since, generally speaking, when an analyst thinks a stock is going to go up, you'd probably expect him to tell you to buy it. So what gives?

Well, apparently it's like this: since AAPL's price has "doubled in value over the last four months," Gardner figures it's grown a little faster than reality might otherwise warrant. So while Apple the company is, in fact, doing extremely well and will probably earn a share price in the $75 area within the next twelve months, that's little enough of a boost that he "can no longer recommend that medium- to long-term investors place new money into the shares." So it'll make investors money, just not enough.

What's more, he thinks that AAPL is due for one of those "corrections" that'll knock a chunk of change off the price before it starts to climb upwards again. In other words, he says that shareholders might want to cash out before the price tumbles and then buy their shares back at bargain basement prices later. As TheStreet.com quotes him: "while we do not see negative catalysts between now and year-end, our valuation work suggests that clients should use strength between now and January to take profits." Well, gee, here's a negative catalyst for ya, Richard: how about an analyst downgrade that triggers a $2.58 drop in the share price? Didja see that one coming? Huh? Didja?

For what it's worth, Gardner's not the only one saying that AAPL's recent Run o' Glory is winding to a close; CNN/Money is also suggesting that investors "cash in on gains" despite Apple's "great prospects," noting that "several institutional investors are starting to sell even though they still think Apple's fundamentals are strong." The good news, of course, is that no one's expecting another full-on power-dive that Apple will need four years from which to recover-- at least, not unless we see a lot more downgrades in the days to come, and that would never happen. Right? Right?