Netflix, Inc. NFLX stock received some love from Wall Street on Friday, including from one analyst who said the company’s new CFO may have the perfect skill set to unlock value for investors.
The Analyst
Imperial Capital analyst David Miller reiterated his Outperform rating and $459 price target for Netflix's stock.
The Thesis
Netflix earlier this week announced the addition of Spencer Neumann as new CFO of the company, a move that flew mostly under the radar.
Netflix made the announcement just two days after Neumann was fired as CFO of video game giant Activision Blizzard, Inc. ATVI. However, Neumann also has a professional background in private equity, and Miller says that skill set may prove to be extremely useful for Netflix.
“This could prove advantageous, in our view, as NFLX, through its most recent $2.0bn bond issuance on 10/22/18, has become much more leveraged versus this time last year, and financial executives with private equity backgrounds tend to be, more often than not, ROIC focused, with debt, rather than equity, as the core engine of growth,” Miller wrote in a note.
Given Netflix’s $8.33 billion in long-term debt and its negative free cash flow, Miller thinks this type of experience may be just what the company needs at the moment.
Miller’s comments come the same day Goldman Sachs added Netflix to its "Conviction Buy" list, with both Goldman and Imperial projecting at least 50 percent upside for Netflix stock from recent levels.
Price Action
Netflix stock traded higher by 8.8 percent at $295 on a strong Friday for U.S. stocks.
Related Links:
Goldman Sachs Adds Netflix To 'Conviction Buy' List
Analyst: FANG Stocks Growth Fundamentals Remain Relatively Strong
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