UPDATE: Netflix (NFLX) PT Lowered $200 to $550 at Pivotal Research
Pivotal Research analyst Jeffrey Wlodarczak lowered the price target on Netflix (NASDAQ: NFLX) to $550.00 (from $750.00) after the company reported an essentially in-line 4Q result (with better than expected US subscriber results offset by worse than expected Latin American results) and worse than expected 1Q paid subscriber and 2022 financial forecasts.
The analyst reiterated a Buy rating, stating "Our view is that the pandemic pulled forward massive amounts of demand for numerous players including Netflix and across the board it is taking longer than expected for gross subscribers to normalize [exacerbated in their largest market (the U.S.) by likely temp churn around material 1Q price increases]. We don’t view the ’22 decline in operating margins as an issue as it mostly reflects the effects of the strong dollar. Post results we reduced our subscriber expectations and the ramp in free cash flow (partly reflecting the aforementioned dollar weakness but also to better capture likely accelerating investment in gaming initiatives). This along with a decision to reduce the terminal EBITDA multiple in our DCF from 18X to 16X (to also better reflect broad tech weakness that is likely to continue) led to a healthy $200 reduction in our YE’22 target price to $550."
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