Citi upgraded Netflix, Inc. NFLX from Neutral to Buy and slapped a $525 price target on shares, 19.5 percent above Thursday's closing price. Citi analysts framed their bullish argument in three factors:
- Recent price declines from 52-week highs made in February. At these prices, Citi said that investors are paying "reasonable multiples" for Netflix's core North American and UK/Ireland markets, while basically getting other international growth for "little to nothing." Those international markets have more than 350 million households with broadband.
- Netflix continues to push out strong content. Citi pointed to the 2015 content as improved from prior years – a main factor that should drive subscriber growth.
- Data shows that Netflix is "disruptive" to video viewing habits and "the broader media landscape." Related Link: Netflix Will Soon Be 'The Most Powerful Media Company In The World;' Here's Why
Netflix is scheduled to report earnings next Wednesday. Citi said it expects the report to be in-line with Street forecasts on both earnings and management guidance and subscriber growth of 1.8 million in Q1. Citi warned, however, that management has a history of guiding lower for Q2 subscriptions, which could create a risk to the immediate price action.
Netflix recently traded at $451.50, up 2.7 percent in Friday's premarket.
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