Why This Netflix Analyst Is Turning Bearish

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The impact of continued U.S. dollar strength is not reflected either in Netflix Inc’s NFLX guidance for the second quarter or in the Street projections, according to Benchmark.

The Netflix Analyst: Matthew Harrigan downgraded Netflix from Hold to Sell while establishing a price target of $157.

The Netflix Takeaways: A sustained recovery in the stock is unlikely, Harrigan said in the downgrade note.

“An issue is moderating growth even as 2023E free cash flow yield (optimistically) is in the 3% vicinity, with FCF yield a more germane metric than P/E as 2023 cash programming spend may still exceed amortizations by $3B+ in our estimation,” the analyst said. 

Related Link: Here's What It Will Take For Netflix To Win Streaming War

“Beyond the inflation challenged and more price sensitive consumer, the continued negative Netflix press glut, relating to member losses and even Prince Harry and Meghan, is a mild growth albatross,” he said. 

“The market is now very jaded on streaming valuations and Netflix stock could be pressured if member growth and operating profit margin stall out in tandem.”

NFLX Price Action: Shares of Netflix were down 1.77% at $166.69 Wednesday morning. 

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Posted In: Analyst ColorEntertainmentDowngradesPrice TargetAnalyst RatingsGeneralBenchmarkMatthew Harrigan
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