Wedbush Upgrades Netflix (NFLX) Two Notches to Outperform; A Method to Their Madness
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Price: $78.16 -0.1%
Rating Summary:
57 Buy, 26 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
57 Buy, 26 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Wedbush upgraded Netflix (NASDAQ: NFLX) from Underperform to Outperform, raises price target from $110 to $155.
Wedbush analyst says, "Upon reflection, it appears to us that the driver for the separation of Netflix into two businesses—Netflix.com (for streaming) and Qwikster.com (for DVD rentals—was to position the streaming business for sale to Amazon.com (Nasdaq: AMZN)...In our view, Amazon has always wanted to be in the streaming business, and has been constrained from buying Netflix due to tax considerations."
"We arrive at our $155 price target through a sum-of-the-parts valuation analysis that values the Netflix streaming business at $130/share, and the Qwikster physical DVD rental business at $25/share. For Netflix streaming, we have assigned a 24x P/E multiple to our 2012 diluted EPS estimate of $3.63, plus an additional 50% premium should Amazon acquire it. For Qwikster, we have assigned a 14x P/E multiple to our 2012 diluted EPS estimate of $1.75. This multiple is roughly in-line with its primary DVD rental competitor, Coinstar (Nasdaq: CSTR)."
For more ratings news on Netflix click here and for the rating history of Netflix click here.
Shares of Netflix closed at $128.50 yesterday.
Wedbush analyst says, "Upon reflection, it appears to us that the driver for the separation of Netflix into two businesses—Netflix.com (for streaming) and Qwikster.com (for DVD rentals—was to position the streaming business for sale to Amazon.com (Nasdaq: AMZN)...In our view, Amazon has always wanted to be in the streaming business, and has been constrained from buying Netflix due to tax considerations."
"We arrive at our $155 price target through a sum-of-the-parts valuation analysis that values the Netflix streaming business at $130/share, and the Qwikster physical DVD rental business at $25/share. For Netflix streaming, we have assigned a 24x P/E multiple to our 2012 diluted EPS estimate of $3.63, plus an additional 50% premium should Amazon acquire it. For Qwikster, we have assigned a 14x P/E multiple to our 2012 diluted EPS estimate of $1.75. This multiple is roughly in-line with its primary DVD rental competitor, Coinstar (Nasdaq: CSTR)."
For more ratings news on Netflix click here and for the rating history of Netflix click here.
Shares of Netflix closed at $128.50 yesterday.
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