Earnings Party: Deutsche Bank Weighs in on Apple Inc. (AAPL) and Netflix, Inc. (NFLX)

As the earnings season rolls on, Deutsche Bank analysts are weighing in with differing takes on tech giants, Apple Inc. (NASDAQ:AAPL) and (NASDAQ:NFLX). Though both analysts recognize positive aspects, they maintain a cautious stance when considering long-term prospects. Let’s take a closer look:

Apple Inc.

As Apple prepares to post its third-quarter print on Tuesday, October 25th, Deutsche Bank analyst Sherri Scribner finds that though preliminary expectations for iPhone sales for the quarter were “muted” heading into the launch, thanks to heavy promotion from all four U.S. carriers, demand is likely to be pulled “forward” and drive “stronger-than-expected initial iPhone 7 orders.” Therefore, Scribner raises iPhone estimates to 46 million for third quarter and forecasts 75 million by fourth quarter.

Additionally, the analyst believes rival Samsung’s hurdles with the Galaxy Note certainly did not hurt sentiment surrounding Apple, although “given the different ecosystems,” Galaxy Note buyers are also most likely not a “significant opportunity” for the tech titan.

Scribner believes, “Given increased build plans at Asian suppliers and a boost from short-lived U.S. carrier promotions, we are raising our iPhone estimates to 46M in C3Q and 75M in C4 Q. While we expect some upside to results versus management’s original guidance, we believe investor expectations have already moved higher and are reflecting a beat and potential raise. We expect positive iPhone comments to continue in the next 1-2 months, which should support the shares into year- end. However, we remain market weight on Apple longer term given slowing smartphone growth and elongating refresh cycles in mature markets.”

The analyst keeps her eyes peeled to these “key inhibitors” to the company’s long-term growth and contends, “we remain cautious on the shares long term, given the fundamentals of the Apple’s main market.”

As such, Scribner reiterates a Hold rating on shares of AAPL with a $108 price target, which represents an 8% downside from where the stock is currently trading.

As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, five-star analyst Sherri Scribner is ranked #131 out of 4,180 analysts. Scribner has a 71% success rate and garners 17.5% in her annual returns. When recommending AAPL, Scribner gains 13.8% in average profits on the stock.

TipRanks analytics exhibit AAPL as a Strong Buy. Based on 36 analysts polled in the last 3 months, 31 rate a Buy on AAPL, 4 maintain a Hold, while 1 issues a Sell. The 12-month price target stands at $130.42, marking an 11% upside from where the shares last closed.

Netflix, Inc.

Last week, Deutsche Bank analyst Bryan Kraft initiated a Sell on Netflix. While the analyst remains bearish on the streaming platform, he notes in regards to his first call on the stock that “clearly it was wrong in the short term” after NFLX performed stronger than expected in third-quarter earnings and fourth-quarter guidance reported on Monday.

As such, Kraft reiterates a Sell rating on NFLX while raising the price target from $90 to $92, which represents a nearly 23% downside from where the shares last closed.

The analyst notes, “3Q provided evidence of a slower than expected deceleration in US subscriber growth, despite pricing un-grandfathering driving higher churn. Management noted that there is room for churn improvement in the US from these favor able comps next year. 4Q guidance was also better than our forecast. US deceleration is a key tenet of the bear case,” adding that management does not forecast a “significant” rise in international net subscription adds for next year, “which represents the bull case.” However, management does hope to “make some progress.”

Ultimately, “We think that considering the 20% increase in after-market trading, we reiterate our Sell rating given our forecast and PT. As we indicated in our initiation, we are positive on Netflix’s business model, however, we think medium-long term expectations for profit growth (and thus valuation) are too high. The market’s expectations for 3Q, in contrast, were low (most expected a miss on subscriber s) and guidance proved to be conservative, thus driving the sharp increase,” Kraft concludes.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, five-star analyst Bryan Kraft is ranked #204 out of 4,180 analysts. Kraft has a 73% success rate and realizes 16.0% in his yearly returns. When recommending NFLX, Kraft earns 0.0% in average profits on the stock.

TipRanks analytics demonstrate NFLX as a Buy. Based on 34 analysts polled in the last 3 months, 17 rate a Buy on NFLX, 10 maintain a Hold, while 7 issue a Sell. The consensus price target stands at $106.52, marking a 10% downside from where the stock is currently trading.  screen-shot-10-19-16-at-01-49-pm

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