Deutsche Bank said Netflix shares may be getting ahead of themselves even after the streaming giant reported a bigger-than-expected subscriber number and strong earnings for the third quarter. The firm downgraded Netflix to hold from buy and maintained its 12-month price target of $590, which is 7% below where the stock closed Tuesday. "We estimate Netflix is currently trading at 8.8x 2022E revenue, as compared with 8.1x implied by our PT, the latter of which is more in line with the company's historical trading range. And we'd add that revenue growth will likely continue to decelerate in 2022 (we estimate 15% revenue growth in 2022, vs 19% in 2021)," wrote Deutsche's Bryan Kraft. "We believe it is difficult to justify Netflix's recent multiple expansion when revenue growth is decelerating," the analyst added. Netflix added 4.4 million global paid net subscribers last quarter , higher than the 3.84 million expected by analysts polled by StreetAccount. While earnings blew past Street estimates, revenue came in at $7.48 billion for the quarter, as expected by Wall Street. Netflix predicted it will add 8.5 million subscribers this quarter and post $7.71 billion in revenue for the period. "While, on the one hand, we share the market's enthusiasm toward Netflix's very strong 4Q content slate and the optionality it brings to 4Q net adds; on the other hand, we think a 4Q subscriber beat is already more than priced into the stock," Deutsche Bank said. Netflix shares were lower by 2.5% in premarket trading Wednesday, extending their losses after the Deutsche Bank call. The shares were up 20% the last three months into the results. — With reporting by CNBC's Michael Bloom .
Deutsche Bank said Netflix shares may be getting ahead of themselves even after the streaming giant reported a bigger-than-expected subscriber number and strong earnings for the third quarter.