Apple Slides on DB 'Downgrade,' but It Shouldn't
Earlier today, the folks at Deutsche Bank removed Apple from its short-term "buy" list, and coming just a day before the company reports its first fiscal quarter, you'd think the firm was making an earnings call, that somehow Apple might miss, or that its valuation might suggest a peak, that investors ought to get out because it's no longer worthy of the list.
Thanks to reader Michael Lehman who wrote in earlier today, calling my attention to DB's policies. It's just another reminder not to rely on headlines, and how powerful an extra second or two of research and reason can be. Lehman took issue with me characterizing the DB news as an Apple "downgrade,"telling me that the firm has internal controls that require it to remove a stock from a short-term buy list 6 months after it was added. Lo and behold, Apple was added on July 22, 2009, exactly 6 months ago today.
"I think the notion that Apple has been downgraded is a misrepresentation of an automatic rule and shareholders are likely to react negatively (and probably already have) to that news," he wrote.
Michael, you are 100 percent right. I contacted DB this morning, and a spokesman confirmed that Apple being dropped from the list today was simply automatic. Period.
At the same time, RBC and BMO both raised estimates on Apple, Hudson Square thinks the company will beat the firm's own forecasts, and Piper Jaffray calls the tablet potentially disruptive for mobile media, and increasingly a direct competitor to Amazon's Kindle .
The DB move garnered lots of headlines. Many of us mischaracterized it, including me. The rest of the tone of my post I still think is right on the money. But the DB portion of it certainly deserved some clarification.
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