After Netflix reported better than expected subscriber growth and marked a major financial milestone, Netflix hit a new high with a wave of euphoric reactions from Wall Street.
After Tuesday night’s earnings and the company’s statement that cash flow will be positive in 2022 and no further debt funding is required, improvements and higher price targets have been reflected on Netflix.
The streaming market leader’s shares initially surged above $ 570, up 14%, and at one point hit a new high of $ 577.77. The trading volume was almost four times as high as normal.
UBS’s Eric Sheridan has updated Netflix from neutral to buy, stating that he sees it as a “long-term winner” as more consumer habits shift to a handful of streaming media platforms around the world. The quarterly results report “will serve as another validation point,” he added.
Sheridan also raised his 12-month price target from $ 540 to $ 650.
Pivotal Research’s Jeffrey Wlodarczak went way beyond that, putting Wall Street’s highest forecast for Netflix stock at $ 750 versus $ 660, with the buy rating still in place.
Netflix “offers consumers an increasingly compelling, unique entertainment experience on virtually any device, without advertising, at a relatively low cost,” the analyst wrote.
Michael Morris from Guggenheim said the earnings report was a “flex” over the competition. Benjamin Swinburne of Morgan Stanley called the cash flow forecast an important turning point. “After moving a debt-financed business model from licensed to native programming over the past five years, Netflix has grown into a self-financed and now highly free cash-flow generating business. This will strengthen its competitive position, reduce the risks to the company and strengthen our view of obesity. “
In the midst of the euphoria, there were a few more measured expressions from the street.
Michael Nathanson of MoffettNathanson kept his “neutral” valuation but raised his price target by $ 45 to $ 465. He sees harsh comparisons with 2020 as a limiting factor on the stock, but praised the company’s execution in a statement to clients. “Looking back at Netflix’s 2020 results, it still stands out
to see how the Covid-19 pandemic was nothing but a great boon to the company’s operations, ”he wrote. “With much of the world still closed in their homes and with nothing left to spend their money on, consumer adoption of streaming services has accelerated for years. With few theatrical releases and the lack of new scripting, Netflix has the edge over others
The choice of entertainment has increased massively in the last year. “
Well-known Netflix bear Michael Pachter from Wedbush Securities is sticking to his “underperform” rating, but raised his price target from USD 235 to USD 340. “While we are far more constructive about Netflix than we have been at any point in nearly a decade, we continue to question its assessment,” he wrote in a research note.