Netflix shares gain after multiple upgrades, bullish commentary from Wall Street
- Raymond James' Justin Patterson upgrades the stock to strong buy from outperform and raises his price target to $450, implying a 38 percent upside from Thursday's close.
- UBS analyst Eric Sheridan also upgrades Netflix, and Morgan Stanley reiterates its buy rating.
- The upgrades from Raymond James and UBS come after a massive surge in Netflix. Since Dec. 24, the stock is up more than 38 percent.
Netflix shares jumped as much as 3 percent in Friday's premarket after multiple analysts upgraded the video-streaming giant.
An hour before Friday's opening bell, the stock was up 2 percent.
Raymond James' Justin Patterson upgraded the stock to strong buy from outperform. He also hiked his price target on Netflix to $450 per share from $435, implying a 38 percent surge from Thursday's close.
"Netflix is approaching a profit inflection," Patterson said in a note Friday. "Coupled with positive app/search data and a solid content slate, we believe there is an upward bias to 2020E Revenue and EPS."
"Given underperformance in 2H18, vs. traditional media, we believe the combination of positive revisions and emerging signs of long-term profit potential will yield share price outperformance," Patterson added. He also noted the high viewer numbers from the movie "Bird Box," and pointed to "Netflix's advantages in film; convenience, cost, and global distribution."
Netflix also received an upgrade at UBS after the bell on Thursday, with analyst Eric Sheridan hiking his rating on the stock to buy from neutral. Sheridan also raised his price target on the stock to $410 from $400, implying a 26 percent upside.
"After six months of stock underperformance & key debates emerging about competition, margins & [free cash flow], we think these debates are better understood by investors and reflected in the current stock price," Sheridan said in a note. "With content spend now at a scale of the major media companies and titles continuing to demonstrate outsized marketplace success, we see the moat around NFLX's global positioning widening and its long-term secular winner status remaining intact."
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