Analysts are chiming in positive on Apple Inc. (NASDAQ:AAPL) and Tesla Motors Inc (NASDAQ:TSLA), despite some tightness revealed in iPhone 7 inventory checks for AAPL and the approval of a controversial acquisition of SCTY for TSLA. However, while these analysts highlight potential for these tech giants, Netflix, Inc. (NASDAQ:NFLX) appears to be in a boat sailing rougher waters now that AMZN has decided to add competitive fuel to the fire with a new global video service. Let’s take a closer look:
Apple Inventory Constrained, but iPhone 10 Offers Attractive Future Potential
Top analyst Gene Munster at Piper Jaffray is out with a research report on Apple after an iPhone 7 inventory check to evaluate the availability of the model in 134 Apple Stores across the U.S.Though inventory continues to be constrained, the analyst likes not only the iPhone 7 cycle, which he views as robust, but commends prospects for future models.
As such, the analyst reiterates an Overweight rating on shares of AAPL with a $155 price target, which represents just under a 34% increase from current levels.
From what the analyst’s checks have shown, 47% of SKUs were available for in-store pickup, an increase from last month’s 40%. Meanwhile, Munster highlights for an extra comparison point that this time last year, the availability of the iPhone 6S was at 100%.
“At this point, we believe it’s unlikely iPhone reaches supply demand equilibrium by the end of the Dec-16 quarter, consistent with Apple’s comments on the Sep-16 earnings call. We remain comfortable with our estimate of 3% iPhone growth in Dec-16, and expect tight supply to be a slight positive for Mar-17 guidance as demand shifts from December to March. We remain positive on AAPL given our continued belief in a strong iPhone 7 cycle and the iPhone 10 potential next year,” Munster concludes.
Additionally, the analyst notes iPhone inventory in China is tighter in China than in the U.S.
Gene Munster has a very good TipRanks score with a 63% success rate and he stands at #12 out of 4,227 analysts. Munster realizes 16.1% in his annual returns. When recommending AAPL, Munster yields 8.3% in average profits on the stock.
TipRanks analytics exhibit AAPL as a Strong Buy. Out of 34 analysts polled by TipRanks, 28 are bullish on Apple stock, 5 remain sidelined, and 1 is bearish on the stock. With a return potential of nearly 19%, the stock’s consensus target price stands at $130.47.
Tesla in a Strong Position for the Long-Term
After Tesla shareholders voted to approve the SolarCity acquisition with an 85% vote, Ben Kallo at Baird remains bullish on the electric car giant despite noting the controversy the acquisition sparked.
On back of the SCTY deal that was “overwhelmingly voted to approve” the acquisition, the analyst reiterates an Outperform rating on TSLA with a price target of $338, which represents a close to 83% increase from where the shares last closed.
Kallo believes, “We see potential long-term benefits as TSLA has identified growth opportunities (solar roof/ complete energy systems) and SCTY is shifting toward cash sales and to become less reliant on capital markets. We believe this removes an overhang and should allow investors to look forward to important growth drivers, including the ramp of the Gigafactory and Model 3. We expect shares to trade higher as TSLA executes.”
Additionally, for investors concerned as to whether a Trump presidency will repeal electric vehicle (EV) subsidies and incentives, TSLA CEO Elon Musk deems the giant “in a strong competitive position regardless of the policies of the new administration, as existing incentives/subsidies are more beneficial to competitors than to TSLA,” the analyst underscores.
Overall, “We expect the stock will move higher after noise around the SCTY acquisition subsides. In our opinion, investor focus will return to the ramp of the Gigafactory, Model S and X production, and the ramp of the Model 3 production, and we believe shares will move higher with execution,” Kallo surmises.
As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, one-star analyst Ben Kallo is ranked #3,434 out of 4,227 analysts. Kallo has a 36% success rate and faces a loss of 1.6% in his yearly returns. However, when suggesting TSLA, Kallo gains 10.3% in average profits on the stock.
TipRanks analytics demonstrate TSLA as a Hold. Based on 12 analysts polled in the last 3 months, 3 rate a Buy on TSLA, 5 maintain a Hold, while 4 issue a Sell. The 12-month average price target stands at $213.11, marking a 15% upside from where the stock is currently trading.
Netflix Prospects at Risk as Global Competition Rises
On Friday, Amazon announced its plans to launch a global video service, one that would expand from approximately 5 to 200 countries, which would mark Netflix’s first global rival. From John Janedis at Jefferies’ opinion, this falls into a larger perspective that more competition will gradually unravel the streaming giant’s rate of expansion.
Therefore, anticipating rapid expansion from Amazon at a far lesser price point, the analyst reiterates an Underperform rating on shares of NFLX with an $80 price target, which represents an almost 31% downside from where the stock is currently trading.
Janedis explains, “While early, our checks suggest that AMZN has been aggressively securing digital rights for content in India, much more so than NFLX. This could ultimately lead to NFLX increasing investment in local content, impacting the margin ramp.”
Moreover, the analyst notes, “AMZN has been developing relationships with local talent and has started making investments in high quality content,” which could affect his marketing cost assumptions for the company “going forward.”
Though the success of Amazon’s new global video service has yet to be rolled out, the analyst remains bearish on the giant. “It appears as though AMZN will look to compete on price and locally created content. Our thesis that increased competition will slow NFLX’s global subscriber growth is unchanged,” Janedis contends.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, five-star analyst John Janedis is ranked #345 out of 4,227 analysts. Janedis has a 63% success rate and earns 6.5% in his annual returns. However, when rating NFLX, Janedis loses 12.7% in average profits on the stock.
TipRanks analytics indicate NFLX as a Buy. Out of 37 analysts polled by TipRanks, 20 are bullish on Netflix stock, 11 remain sidelined, and 6 are bearish on the stock. With a return potential of nearly 8%, the stock’s consensus target price stands at $123.97.