Netflix (NFLX) Gets a Rare Upgrade Following Recent Blow-Up

Hudson Square upgraded Netflix (NASDAQ: NFLX) from Hold to Buy with a price target of $110.

The firm said while their call may be early, following yesterday's 35% slide and the retreat of the stock’s biggest cheerleaders to the sidelines "we see an opportunity in Netflix with 25M subscribers, and a proven (though recently tarnished) track record of generating earnings growth following stair-step periods of investment."

While the firm sees a total loss in 2012 of $0.23 per share, they said this will be driven by the company's aggressive international push. They estimate domestic EPS at $5.32 for the year.

The firm's $110 price target is driven by an 18x domestic P/E, which yields a domestic EV/Sub of $195; and assumed 20% discount for international subs at $156/Sub.

Analyst Daniel Ernst feels today's situation is similar to the 2004/2005 episode when shares fell 72% following a June 2004 price hike and a subsequent
October 2004 price reduction. This reset expectations much lower for 2005. "Ultimately, Netflix greatly outperformed those reduced expectations," he notes.

For more ratings news on Netflix click here and for the rating history of Netflix click here.

Shares of Netflix closed at $77.37 yesterday.

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