Apple Inc.'s stock slipped 0.4% in premarket trade Friday, after Raymond James downgraded the technology giant on concerns over valuation and potential disappointment over the impact of Apple Watch sales. Analyst Tavis McCourt cut his rating to market perform, after being at outperform since January 2014. McCourt said early reviews of Apple Watch suggest sales could fall well short of the "insanely great" benchmark. "Although the financial impact of the Apple Watch is almost immaterial near term, we are concerned that relatively muted reviews so far could place added fear in investors' minds about the company's ability to launch successful new product categories," McCourt wrote in a note to clients. He raised his fiscal second-quarter profit and sales outlook slightly on expectations of strong iPhone sales and increased share buyback activity, but he believes the expected difficulty in maintaining the pace of year-over-year growth and the fact that valuations are now roughly in line with its peers and the broader market could keep the shares range bound. The stock, a component of the Dow industrials, has rallied 15% year to date, while the Dow has gained 0.8%.
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