Wall Street analyst on Monday lowered earnings estimates for Apple’s fiscal second quarter and year, marking a second whack from a financial soothsayer in the past few days.

Doug Reid, an analyst with Thomas Weisel Partner, lowered Apple’s fiscal second-quarter earnings estimates from $1.10 a share to $1.05 a share. For the fiscal year, Reid cut estimates from $5.31 a share to $5.10 a share, according to his research note.

He also dropped Apple’s 12-month stock price target by $10 to $120.

The lowered outlook for Apple comes amid a painful recession.

Despite his decision, Reid did note that he views Apple’s stock price as undervalued:

Despite our reduction in estimates, we believe AAPL shares are undervalued given the company’s strong cash generation capabilities, balance sheet, and clear Mac market share gain momentum. With respect to Mac market share in the 228mn unit worldwide PC market, we expect Mac market share to increase from 3.3 percent in (calendar year) 08 to 3.7 percent in (calendar year) 09. We expect that driving Mac market share gains in (calendar year) 09 will be (1) lowered priced all-in-one desktops released on March 3, 2009, (2) positive impact on Mac unit sales of introduction of DRM free music on iTunes at Macworld on January 6, 2009, and (3) continued momentum from the company’s refreshed Macbook line released on October 14, 2008.

We also believe that negative investor sentiment around rising app store competition is misplaced. Specifically, we estimate that app store revenue to AAPL wil be only 0.5 percent of (fiscal year) 09 revenue based on a $23/user spend on applications and that the rise of all app stores, AAPL-controlled or not, serves to increase the desirability and loyalty of users on the iPhone and broader AAPL hardware and software platforms.

Apple was up 2 percent to $87.02 a share in early morning trading.

On Friday, Apple’s stock fell as much as as 7.3 percent to $82.33 during intraday trading, after a J.P. Morgan analyst cut his earnings estimates and price target on the company.

That analyst’s decision was also driven by the recession’s grip on consumer spending.