Have investors binged too much Netflix?
That’s one analyst’s theory, though not the Street’s consensus. The streaming giant’s shares were dipping early Friday following yesterday evening’s earnings report. Netflix (NFLX), which rose nearly 2% yesterday ahead of the results, were down more than 4% Friday, putting them among the S&P 500’s top decliners. The stock was up more than 40% this year through Thursday’s close.
The company’s results and improved outlook were “solid against high expectations,” wrote JP Morgan analysts. But they reiterated a neutral rating, setting a $1,300 price target that calls for comparatively little appreciation between now and the end of next year. The shares, they wrote, “need a breather.”
Most of Wall Street, according to Visible Alpha data, is more optimistic, with nearly all the analysts who track the stock holding bullish ratings and the mean price target sitting right around $1,400. (That number would represent a new milestone for the shares.)
UBS, for example, lifted its price target by $45 to $1,495—which is high, but not the high, with Visible Alpha tracking several targets at or above $1,500. “We see Netflix as a secular winner and think 2Q results support our conviction,” they wrote.
Netflix yesterday turned in net income that topped analysts’ estimates and revenue, lifted by price increases, that came in right around them; it also lifted its sales forecasts for the third quarter and full year. The company said its second-half operating margin will come in lower than its first-half figure, which it called typical and tied largely to the timing of expenses throughout the year.
This article has been updated since it was first published to reflect new share-price information.
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