Some Analysts Hit REWIND Button on Netflix (NFLX), While Others Hit PLAY

While traders are clearly lauding fourth-quarter results at Netflix (Nasdaq: NFLX) Thursday (the stock is up more than 21 percent), let's see where analysts stand following the strong report.

The stock received three upgrades from financial firms, while at least six other firms raised their price targets on the company. There are still a few analysts who felt the company has not made the adjustments needed to become the growth company it once was.

Upgrades:

• Citi - from Neutral to Buy, price target increased from $80 to $130.
  
  
• Gabelli - from its previous rating of Sell to Hold.
  
  
• Atlantic Equities - from Underperform to Neutral, price target raised from $70 to $115.

Price Target Changes/Notable Comments:

• Goldman - from $82 to $115, Neutral. An analyst commented "We now value NFLX using a SOTP instead of pureplay EV/EBITDA, as we forecast depressed consolidated EBITDA over the next several years, making the latter approach less meaningful. NFLX is in the midst of an investment cycle, and almost all of its profits will be reinvested into int’l expansion well past the initial push abroad.”
  
  
• Oppenheimer - from $90 to $130, Outperform. Said strength in the stock was related to "investor sentiment around the sustainability of the business model, driven by near-term results."
  
  
• Susquehanna - from $60 to $95 and reaffirmed its Neutral rating.
  
  
• Jefferies - from $75 to $115, while maintaining its Hold rating. Suggested "visibility into the model remains cloudy."
  
  
• Canaccord Genuity reaffirmed its Sell rating on Netflix, but increased its price target from $57 to $66. The firm pointed at continued issues with "subscriber losses, rising content costs and an increasingly competitive landscape."
  
  
• JPMorgan boosted its price target on the company from $67 to $95, Neutral.
  
  
• Needham & Company said, “The competitive landscape continues to be a major uncertainty in the Netflix story. The company believes, for example, that Amazon (Nasdaq: AMZN) will set up a subscription service separately from its current all-you-can eat Prime service. However, it’s uncertain whether Amazon will commit enough resources to a separate service to make its content competitive with Netflix’s."
  
  The firm reiterated its Underperform rating on the stock.
  
  
• An analyst at Wedbush highlighted, “Netflix has to make a choice: either it will have high subscriber growth due to high-cost, high-quality content, meaning profits will be small or nil; or it will have lower subscriber growth due to low-cost, low-quality content, meaning it will make money but not be a growth story. In our view, the high-growth, high-profit story is not going to happen.”
  
  The firm reaffirmed its Underperform rating and $45 price target on the company.
  
  
• Dougherty & Company - from $90 to $103, Neutral. An analyst said, “Since the beginning of the year the shares have rallied, up 50%, reflecting just how oversold the stock was at the end of last year. While we still believe Netflix has the potential to build a powerful global business, with little visibility into the profit ramp beyond this intense investment period, we are going to stay on the sidelines with our Neutral rating.”

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