UPDATED with closing price. After Netflix reported better-than-expected subscriber growth and marked a major financial milestone, the company’s stock rose 17% amid a wave of euphoric sentiment from Wall Street analysts.
Updates and increases in price targets rained on Netflix after Tuesday night’s financial results, as well as the company’s statement that it will have positive cash flow in 2022 and will not need further debt financing.
The streaming leader’s stock jumped with the opening bell today and never declined, reaching a high of $ 593.29, before closing at $ 586.34. Turnover was more than seven times normal levels.
Eric Sheridan of UBS updated Netflix to “buy” from “neutral”, explaining that he sees it as a “long-term winner, as more consumer habits change globally towards a handful of media platforms. streaming “. The quarterly earnings report “will act as another validation point,” he added.
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Sheridan also raised his 12-month price target from $ 540 to $ 650.
Along with UBS, another major institution issuing an update was Wells Fargo, which went from “equal weight” to “overweight”.
Jeffrey Wlodarczak of Pivotal Research offered what he said was the highest Wall Street projection for Netflix shares at $ 750, above $ 660, with a “buy” rating still in place. Although the price increase in the U.S. has just taken effect, Netflix “offers consumers a unique and increasingly attractive entertainment experience on virtually any device, without commercials at a relatively low cost,” wrote the analyst.
Michael Morris of Guggenheim described the earnings report and financial outlook as an alternative for competitors. Benjamin Swinburne of Morgan Stanley also cited cash flow guidance as an important tipping point. “After a debt-financed business model has shifted from licensed programming to the original in the past five years, Netflix has become self-financing and now a highly free cash flow-generating business. This will strengthen your competitive position, reduce risks to the business and reinforce our ‘overweight’ vision. “
Along with the expressions of admiration, there were, however, a few more thoughtful opinions to be found on the street.
MoffettNathanson’s Michael Nathanson maintained his “neutral” rating, but raised his target price by $ 45 to $ 465. He sees the tough comparison with 2020 as a limiting factor for inventory, but praised the company’s execution in a note. customers.
“Looking back on Netflix’s 2020 results, it is still impressive to see how the Covid-19 pandemic was nothing but a major benefit to the company’s operations,” he wrote. “As much of the world is still closed in their homes, with nowhere to go and nothing to spend their money on, consumers’ adoption of streaming services has been accelerated for years. With theatrical releases still few and far between and a lack of new scripted programming, Netflix’s advantage over other entertainment options has increased enormously in the past year. “
The famous bear Michael Pachter of Wedbush Securities is maintaining its “underperforming” rating on Netflix, but has increased its target price dramatically, from $ 235 to $ 340. “Although we are much more constructive about Netflix than at any time in almost a decade, we continue to question your assessment, ”he wrote in a research note.