UPDATED with closing price. After Netflix reported better-than-expected subscriber growth and marked a major financial milestone, the company’s shares rose 17% amid a wave of euphoric sentiment from Wall Street analysts.
Upgrades and increased price targets rained down on Tuesday night’s financial results on Netflix, as well as the company’s statement that it will be positive cash flow in 2022 and will not require more debt financing.
Shares in the streaming leader jumped at the opening bell today and never disappointed, reaching a high of $ 593.29 before closing at $ 586.34. The trading volume was more than seven times the normal levels.
Eric Sheridan of UBS upgraded Netflix to buy ‘neutral’, explaining that he sees it as a ‘long-term winner as more consumer habits move to a handful of media platforms worldwide.’ The quarterly earnings report “will serve as a further confirmation point,” he added.
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Sheridan also raised its 12-month price target from $ 540 to $ 650.
Along with UBS was Wells Fargo, another major institution that issued an upgrade that moved from “equal weight” to “overweight”.
According to Wall Street, Jeffrey Wlodarczak of Pivotal Research offered the highest projection for Netflix shares at $ 750, compared to $ 660, with a “buy” rating. Although a US price increase has just come into effect, Netflix ‘offers consumers an increasingly attractive unique entertainment experience on virtually any device, without ads at a relatively low price,’ the analyst wrote.
Michael Morris of Guggenheim describes the earnings report and financial outlook as a ‘flex’ for competitors. Benjamin Swinburne of Morgan Stanley also cited the cash flow guidance as an important turning point. After a debt-financed business model switched from licensed to original programming over the past five years, Netflix switched to a self-financed and now an extremely free cash-generating business. This will strengthen its competitive position, reduce the risks for the business and strengthen our ‘overweight’ view. ”
Along with expressions of awe, there were still some measured opinions about the street.
Michael Nathanson of MoffettNathanson maintains its “neutral” rating, but raises its price target by $ 45 to $ 465. He considers tough comparisons with 2020 a limiting factor for the stock, but has the company’s performance in a note to customers praised.
“Looking back at Netflix’s 2020 results, it’s still striking to see how the Covid – 19 pandemic was nothing short of a huge blessing to the business,” he wrote. ‘As a large part of the world is still locked in their homes, there is no place to go and nothing to spend their money on, the adoption of streaming services by the consumer has been accelerated by years. As there is still little theatrical release and a lack of new text programming, Netflix’s advantage over other entertainment choices has increased tremendously over the past year. ”
Well-known bear Michael Pachter of Wedbush Securities is sticking to his “underperformance” rating on Netflix, but he’s dramatically raising his price target to $ 340 from $ 235. ” was, we continue to question its valuation, “he wrote in a research note.