NEW YORK (CNNMoney.com) - Apple Computer stock slumped Wednesday after a pair of banks cut their ratings on the iPod maker's stock, saying it appeared overvalued.

Shares of Apple (down $3.78 to $71.20, Research) sank about 5 percent in active trading on Nasdaq.

Bank of America Securities cut its rating of Apple to "neutral" from "buy" Wednesday morning, citing concerns about the stock's value in recent weeks.

"We still like the story, but the recent run-up of over 50 percent in the last six weeks has left us less comfortable recommending putting new money to work," Keith Bachman, an analyst with Bank of America Securities said in a research note.

Believing that optimism about near-term earnings was priced into the stock, Bear Stearns cut its rating on Apple to "peer perform" from "outperform".

The downgrades follow Apple's recent success with video-enabled iPod, which allows users to download and play music videos as well as home movies. Since releasing the device in October, Apple has signed agreements with Walt Disney to sell television shows from ABC and is reportedly close to a similar deal with NBC Universal. Apple sold over one million videos and short films through its iTunes Internet music store within a month of the video iPod's release.

The announcement by the two banks also comes a few weeks ahead of the Macworld Expo, which starts Jan. 9 in San Francisco, Calif. The five-day conference, which is one of the biggest events for Mac fans, could herald an announcement of new products such as an iPod "boombox," according to reports by Appleinsider.com, an online news site and forum for Apple enthusiasts.

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