Deutsche Bank upgrades Apple to buy, says investors displaying 'more emotion than reason' right now

Published Wed, Mar 25 20206:21 AM EDTUpdated Wed, Mar 25 202012:27 PM EDT

(This story is for CNBC PRO subscribers only.) Amid all the market volatility now is the time to buy Apple , according to one Wall Street firm. Deutsche Bank upgraded the stock to buy from hold on Tuesday night and said the recent downturn presented a tremendous opportunity for investors to own a piece of the tech giant. Shares of the company are down 15% this year as the coronavirus pandemic has swept the globe causing fear and panic in the markets as well as store closures . "AAPL has long been a quality company that we've admired but have felt the recent valuation run was too rich for us from a risk-reward standpoint," analyst Jeriel Ong said. "At the present, we see the stock market as displaying more emotion than reason, a 'shoot first and ask questions' later mentality," the analyst said. "In such an environment, investors may lose sight of the long-term drivers of the underlying value of companies and tend to focus on levers to the downside/upside in the near-term." The analyst cited 4 key drivers as its reasons for "tilting bullish" on the stock including iPhone, AirPods, Services, and gross margins. "Overall, while we worry about the near-term downside from retail store closures and smaller spending purses from unemployment/economic dislocation, we believe these long-term drivers remain largely intact." The firm did adjust its price target down to $270 from $295 cautioning clients that while it sees a buying opportunity, there's still much uncertainty about the long-term effects of the coronavirus. The analyst estimates Apple will conservatively earn $15 a share next year, which puts the stock at a 16 multiple based on that estimate. This is not especially cheap relative to Apple's history, but Deutsche Bank believes the stock will garner a multiple higher than the market because of its strong balance sheet and high margins in this uncertain economic environment. "While there are risks (retail closures, supply chain/timing disruptions, overall macro impacts to purchasing), we believe they are more near-term than long-term in nature," they said. A slowdown in production in China due to the coronavirus led the company to issue a warning back on February 17 that it wouldn't meet its March sales forecas t. Many of its China stores and factories have since re-opened. Apple shares are up over 3% in midday trading.

Apple CEO Tim Cook gestures after opening the newly renovated Apple Store at Fifth Avenue on September 20, 2019 in New York City.

Kena Betancur | AFP | Getty Images

(This story is for CNBC PRO subscribers only.)

Amid all the market volatility now is the time to buy Apple, according to one Wall Street firm.