While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.
What: Shares of Apple (NASDAQ:AAPL) gained slightly in pre-market trading Thursday after Deutsche Bank initiated coverage on the consumer electronics gorilla with a buy rating.
So what: Along with the bullish call, analyst Sherri Scribner planted a price target of $650 on the stock, representing about 23% worth of upside to yesterday's close. So while momentum traders might be turned off by Apple's sluggish price action in recent months, Scribner's call could reflect a growing sense on Wall Street that the company's growth prospects are becoming too cheap to pass up.
Now what: According to Deutsche, Apple's risk/reward trade-off is rather attractive at this point. "While growth is expected to decelerate in both [iPhone and iPad] markets, industry growth remains robust, with smartphones expected to grow units in the high teens for the foreseeable future and tablets expected to grow in the mid-20%s," noted Scribner. "We expect iPhones and iPads to be the key growth driver for Apple over the next year, with further upside in iPhones coming from a larger screen sized phone and further penetration in emerging markets." When you couple that upbeat view with Apple's cheapish forward P/E of 11, it's tough to disagree with Deutsche's bullishness.