Deutsche Upgrades Navteq Following Buyout: Totally Pointless

Yesterday, Nokia (NOK) announced that they would buy map software maker Navteq (NVT) for $8.1 billion ($78/share). Navteq has been a top performing stock this year, currently up 118%.

Unfortunately, Matrix and Deutsche Bank both had Sell ratings on the stock going into yesterday's takeover news. But not to worry, Deutsche Bank upgraded the stock from Sell to Hold and upped their price target from $30 to $78 this morning. At this point, is it really necessary for Deutsche to change their rating?

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Comments

[coitus:]

I'll let you in on a little secret of how the sell side gets compensated in the post Spitzer world. Analysts get compensated for "market moving" upgrades/downgrades. In principal, an analyst makes a smart call that causes a stock to move, they get rewarded for it. As in any comp system, guys have figured out how to game it. So when you have a market moving event (i.e. a takeout), it pays to upgrade from Sell to Hold. In a dumb comp system, boom, you just did a market moving call and you'll get compensated for it even though you had nothing to do with it. Think of it as monkey piling onto good/bad news by analysts.

2007 Oct 02 10:36 PM