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Sun Microsystems'


bull rush came to an abrupt halt on the first day of trading in 2005, as Sanford Bernstein downgraded the stock, saying share prices may have outrun the company's ability to grow.

Sun appreciated by about 60% from August to the end of the year, but the downgrade put a stop to that -- for now at least. In recent trading, shares were off 26 cents, or nearly 5%, to $5.13 on heavy volume.

Bernstein analyst A.M. Sacconaghi "applauded Sun's effort to reinvent itself" but does not "see enough evidence among leading financial indicators to warrant holding SUNW at current levels."

He noted that the stock is trading at 45 times his FY 2006 estimates and is at the very high end of its 2 1/2-year range. "While Sun's recent performance marks the fourth time the stock has appreciated 30% or more in the last two years, in each of the previous three occasions the run-up was followed by a retreat of 20% or more," Sacconaghi wrote in his note downgrading the stock to underperform.

Sacconaghi said he doesn't expect to see any upside to revenue forecasts when Sun reports its second-quarter results on Jan. 13.

(Bernstein does not have a banking relationship with Sun.)