Apple Upgraded by Oppenheimer Seeing No Unplanned Leadership Change

Oppenheimer analyst Yair Reiner Tuesday morning upgraded Apple (AAPL) to Outpeform from Perform, citing Monday’s disclosures on the health of CEO Steve Jobs. “While the letters from Jobs and Apple’s board raise more questions than they answer,” he writes, “they allay the central concern we raised two weeks ago: the risk of a hasty, unplanned leadership change.” On December 17, Reiner had downgraded the stock specifically citing the risks of a sudden departure by Jobs.

Reiner writes that he doesn’t know what ails Jobs, and that he is not ready to believe that a problem with a “relatively simple and straightforward” remedy is a problem that is itself “simple and straightforward.” But he adds that “it seems unlikely that Jobs, the board, and its counsel would disclose the prognosis of a six-month recovery if it were at odds with doctors’ expectations.”

Concludes Reiner: “we are satisfied that a sudden change of leadership is not imminent.

Reiner says that the comment from the Apple board that Jobs deserves its “complete and unwavering support during his recuperation,” seems to indicate that the risk to his health is grave, but that the letter from Jobs “nevertheless suggests that the most likely outcome is a return to relatively normal health.”

Reiner says the prognosis of a six-month recovery buys Apple some time with the Street. He also points out that there are still many unknowns, including whether Jobs is currently engaging in his normal CEO duties, what suddenly prompted him to seek out the root cause of his condition a few weeks ago, and what the long-term prognosis of his condition is. But he concludes that the risks surrounding Jobs’ health now appear less acute, and allow investors to refocus on Mac share gains, the iPhone revolution, the cash in the bank and the cash that’s still flowing.