Jefferies Upgrades Netflix And Raises Price Target

Jefferies upgraded Netflix, Inc. NFLX from Underperform to Hold in a research note issued Thursday and raised its price target from $300 to $350 after the stock fell approximately 25 percent in aftermarket trading on Wednesday.

Analysts led by Brian Fitzgerald commented that “despite the 3Q subscriber miss. We think the price increase - which has yet to kick in for most subs - is a meaningful positive.”

Fitzgerald also noted that Netflix “has proven it can achieve international profitability, giving confidence in future launches. While our prior concerns persist, the risk/ reward profile looks much more favorable at these levels.”

The research note observed that the “4Q outlook reflects increased spending related to the massive European streaming launch. Large marketing and content costs will pressure 4Q EPS, with $0.44 outlook well below Street $0.86. We have confidence Netflix will improve profitability over time, as it has with every other international launch.”

Fitzgerald concluded that “using after-hours pricing, NFLX trades at 23x our 2015 EBITDA (vs. a 46 percent 2014-17 CAGR). Our PT is based on DCF (9 percent WACC, 3.0 percent LTGR).”

Netflix, Inc. traded at $338.50 in the premarket, down 24.54 percent.