U.S. Markets closed

2 Analysts Get More Bullish On Netflix, Upgrade Stock To Buy

Wayne Duggan

Netflix, Inc. (NASDAQ: NFLX) got some love from Wall Street, with two analysts upgrading the stock ahead of Q4 earning season.

Raymond James Bullish

Raymond James analyst Justin Patterson upgraded Netflix from Outperform to Strong Buy on Friday and raised his price target from $435 to $450. According to Patterson, Netflix is building the foundation for substantial profitability down the line.

Based on the latest app and search data, Raymond James is expecting upside to Netflix revenue and earnings through 2020.

“Given underperformance in 2H18, vs.traditional media (e.g. DIS, CMCS), we believe the combination of positive revisions and emerging signs of long-term profit potential will yield share price outperformance,” Patterson wrote.

He said the success of “Bird Box” is confirmation that Netflix’s movie strategy is working. He said Netflix’s convenience, lower cost and global distribution give it the means to continue to gain market share in coming years.

UBS’ Take

UBS analyst Eric Sheridan upgraded Netflix from Neutral to Buy and raised his price target from $400 to $410. Sheridan said the latest checks suggest subscriber growth is tracking ahead of consensus estimates.

“After six months of stock underperformance & key debates emerging about competition, margins & FCF, we think these debates are better understood by investors and reflected in the current stock price,” he wrote.

Sheridan said the potential to increase margins and free cash flow over time is not fully priced into Netflix stock as of yet. Despite increasing competition in streaming video, Sheridan said Netflix has been widening its competitive moat and remains on track to be a primary long-term secular streaming winner.

Price Action

Netflix was up 3.8 percent at $337 Friday afternoon.

Related Links:

Analyst: New CFO May Be Perfect Fit For Netflix

Goldman Sachs Adds Netflix To 'Conviction Buy' List

Latest Ratings for NFLX

Date Firm Action From To
Jan 2019 Morgan Stanley Reiterates Overweight Overweight
Jan 2019 Raymond James Upgrades Outperform Strong Buy
Jan 2019 UBS Upgrades Neutral Buy

View More Analyst Ratings for NFLX
View the Latest Analyst Ratings

See more from Benzinga

© 2019 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.