UPDATE: Deutsche Bank Starts Apple (AAPL) at Buy; Dominant Smartphone, Tablet Position to Bolster Growth

(Updated - April 10, 2014 7:50 AM EDT)

Deutsche Bank assumes Apple (Nasdaq: AAPL) with a Buy rating and price target of $650, suggesting 23 percent upside from Wednesday's close at $530.32.

Analyst Sherri Scribner noted Apple's dominant position in smartphones and tablets where its products represent the gold standard in both categories. Along with an expected bump from a larger iPhone, the analyst sees new product introductions as long-term growth drivers.

iPhones and iPad represented 72% of Apple’s sales in 2013 and are central to the company’s performance. While growth is expected to decelerate in both markets, industry growth remains robust, with smartphones expected to grow units in the high teens for the foreseeable future and tablets expected to grow in the mid-20%s. We expect iPhones and iPads to be the key growth driver for Apple over the next year, with further upside in iPhones coming from a larger screen sized phone and further penetration in emerging markets, said Scribner.

Along with a potential snartwatch and TV set, Scribner sees Apple being able to bring its expertise to the connected home, akin to what Nest has been offering lately. Apple still has the ability to “surprise and delight” its customers, therefore any new and successful product would provide upside to the company’s already above-market growth rates, the analyst noted.

Deutsche Bank's $650 price target assumes a multiple of 14 times expected FY15 EPS of $46.50. Notably, Apple's historical valuation is around 24 times earnings, but slower growth is putting that multiple more in-line with the market.

For an analyst ratings summary and ratings history on Apple click here. For more ratings news on the company, click here.

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