Longtime Netflix Bear Upgrades The Streaming Stock, But Is It A Better Investment Than Disney?

Zinger Key Points
  • A previous Netflix bear has become a bull after the stock's dramatic fall.
  • Another investor remains a Netflix bear, but prefers the stock to Disney.

Netflix Inc NFLX was featured as the call of the day Monday on CNBC's "Fast Money Halftime Report."

What Happened: Wedbush analyst Michael Pachter upgraded Netflix from a Neutral rating to an Outperform rating, citing the potential for better-than-expected second-quarter results.

The Wedbush analyst noted that Netflix is making substantial changes to its business model and is just beginning to explore changes to its release strategy, an approach that could help fuel a strong quarter. The company also plans to crack down on password sharing, which could provide a boost for the stock.

"We believe Netflix is now an immensely profitable, slow-growth company," Pachter wrote in a note to clients.

Related Link: Wedbush Upgrades Netflix As 'Immensely Profitable, Slow-Growth Company': What Else Interests The Analyst?

Why It Matters: Pachter has been one of the most outspoken bears on Netflix, but following the stock's dramatic declines, the longtime bear has turned bullish on the streaming giant.

That's not enough to turn Virtus Investment Partners' Joe Terranova bullish on the stock, however, he prefers Netflix over streaming competitor Walt Disney Co DIS

"On a valuation basis, if I'm measuring Disney relative to Netflix, I still think that Netflix probably provides the better opportunity longer term," Terranova said. 

Following Terranova's take, Cerity Partners' Jim Lebenthal defended Disney and raised concerns about Netflix.

"How did management let literally one-third of its subscriber base just hang out paying nothing, freeloading? I mean, that's a very big operational misstep," Lebenthal said. 

He told CNBC that he owns Disney shares, noting that the company's most recent earnings report shows that Netflix's subscriber troubles don't extend to the rest of the streaming space. 

NFLX, DIS Price Action: At press time, Netflix was up 1.30% at $190.07, while Disney was down 0.73% at $106.55

Photos: courtesy of Tumisu and Skitterphoto from Pixabay.

Posted In: CNBCJim LebenthalJoe TerranovaMichael PachterEntertainmentLong IdeasTrading IdeasGeneral