Shares in the world's largest technology company were down 3.6 percent to $333.07 in midday trade, a loss in market value of about $10 billion. The shares fell 2.3 percent on Tuesday.
JMP Securities' Alex Gauna downgraded Apple to market perform from market outperform, citing a sharp slowdown in sales growth at its primary manufacturing partner, Hon Hai Precision Industry <2317.TW>, Taiwan's top electronics firm,
Apple is likely Hon Hai's single largest customer.
Gauna is among just five of 54 analysts on Thomson Reuters I/B/E/S with a sell, hold or neutral rating on the stock, a perennial market darling and mainstay of global portfolios.
The shares are up nearly 70 percent since the start of 2010. Apple declined to comment on the recent decline.
There's a risk of complacency. The sell-side has gotten itself into a game on one-upmanship, Gauna said. Investors should make sure that they're comfortable with the situation ... especially since there's just so much uncertainty right now.
He added, We know that Japan as a supplier matters.
Japan is a major source of glass for displays used in smartphones and tablets and is home to around a fifth of the world's semiconductor production. Japanese factories producing everything from chips to car parts have closed following the earthquake and tsunami last Friday, threatening supplies to manufacturers across the globe.
Also, Apple derives an estimated 6 percent of its sales from Japan.
BACK TO EARTH
Wall Street is accustomed to Apple blowing its own sales estimates out of the water. But Gauna warned that major technology companies' shares have been punished more severely of late for missing financial estimates.
Nervous analysts have worried for years that the stellar stock prices of technology giants like Apple could tumble back to earth, especially as competition intensifies for its hottest products, from the iPhone to the iPad. The tablet is expected to have sold 1 million units since its Friday launch.
Some top hedge fund managers cut their stakes in both Apple and Google Inc
JMP said sales growth in Hon Hai slowed from 84 percent year-over-year in December to 37 percent in January and 26 percent in February.
The causes for this could include competition for the iPhone from smartphones based on Google's Android, weakness in computing products as tablet demand grows, and product transition risks around the iPad 2, the brokerage wrote.
Gauna said his cautious stance on Apple was not predicated on any longer-term fundamental concerns with the company's technology or roadmaps.
Apple and Hon Hai sales growth was tightly coupled throughout 2010, and given Apple's scale, we view it as unlikely that a correlation isn't still in effect as Hon Hai slows, the brokerage said in its report.
(Reporting by Edwin Chan in Los Angeles and Jennifer Robin Raj in Bangalore; Editing by Saumyadeb Chakrabarty and John Wallace)