As the broader market ticks up about 1%, Netflix stock is skyrocketing a staggering 16%, pushing the streaming giant's market capitalization up more than $30 billion.
Shares of Netflix are nabbing new highs despite earnings that slightly missed analyst expectations; here's what Wall Street's saying about the entertainment monolith's booming prospects.
Netflix stocks Flood
- As the broader market ticks up about 1%, Netflix stock is skyrocketing a staggering 16%, pushing the streaming giant's market capitalization up more than $30 billion .
- The stock surge began nearly immediately after the firm posted fourth-quarter earnings of $542 million, falling about 14% shy of average analyst expectations but also nabbing better-than-expected sales of $7.1 billion and surpassing 200 million subscribers.
- "We remain bulls on the Netflix story," said Pivotal Research Group analyst Jeffrey Wlodarczak who raised his Netflix price target by $90 to a Wall Street high of $750.
- In a note to clients, Wlodarczak noted that Netflix beat subscriber expectations in all its major markets, including nearly 1 million new net subscribers in the U.S. and Canada; he's also bullish on the firm's better-than-expected first-quarter forecast and financial independence
- "The move in Netflix shares seems a tad excessive," Vital Knowledge Media Founder Adam Crisafulli said Tuesday evening, lauding the firm's cash outlook.
- Bank of America also upped its Netflix price target after earnings to about $680, roughly 17% above current prices of about $580 but still much higher than the average $560 target among analysts issuing such guidance.
Wall Street's most bearish Netflix outlook comes from Wedbush Securities analyst Michael Pachter. He gave shares a price target of $340 after Tuesday's report, conceding that the firm "consistently surprises" him with subscriber growth but noting that he "continues to question" its current valuation. "We have been consistently wrong about Netflix".
Bank of America Opinion
Bank of America notes that key risks to its bullish Netflix price target include the United States reaching a streaming saturation point more quickly than expected, a net neutrality repeal causing internet-service providers to charge Netflix more for their services, increasing content costs and heightened competition. Regarding the latter point, Wlodarczak is doubtful competitors "can or will be able to keep up with Netflix content… with Disney+ and Hulu [serving as] complementary, Amazon on the periphery and a reasonable shot that AT&T will mismanage HBO Max (in similar fashion to DirecTV)."
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