Wedbush Upgrades Netflix (NFLX) to Outperform, Analyst Says 50% Rally in Shares is 'Achievable' in Next 12 Months

May 16, 2022 7:20 AM EDT
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Wedbush analyst Michael Pachter upgraded Netflix (NASDAQ: NFLX) shares to Outperform from Neutral with a $280.00 per share price target.

The upgrade call is based on expectations that the streaming giant will “exceed its guidance for Q2” amid the staggered release date for Ozark.

“While it is possible that the company will once again issue downbeat guidance for Q3, we think that the staggered release date for Stranger Things will reduce churn, and once again, we think that Netflix is positioned to grow. We do not expect wholesale changes to occur rapidly; we think Netflix will only gradually raise prices and roll out its ad-supported option. However, we think that the sooner the company shows its commitment to reducing churn by releasing new content over several weeks, investors will see an uptick in subscribers and their confidence in the Netflix business model will be restored,” Pachter said in a client note.

However, the analyst added that he doesn’t believe that NFLX stock will return to 2021 levels “for many years,” although he adds that $280 is “achievable within the next 12 months.”

“There is clearly significant upside to Netflix’s recent share price, which has consistently been below $200 as Netflix bulls have gone into hiding and bears have raised concerns about the impact of competition. With over 40% upside to Friday’s closing price, we find Netflix shares to be a compelling investment,” Pachter concluded.

Netflix stock price is up 1.6% in pre-market Monday.

By Senad Karaahmetovic

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