Despite Netflix stock shedding 16% of its value YTD, Street analysts continue to have a bullish stance
Netflix Inc (NASDAQ:NFLX) stock closed at $96.59, up about a meager 0.73% against the previous day’s close. The stock has drastically underperformed the S&P 500 Index since the start of this year, through August 12. Netflix stock has nose-dived about 16% during the period, while the S&P 500 Index has shown tremendous performance, surging about 7% over the same time span.
At current levels, the stock trades between the 52-week range of $79.95 and $133.27. With a total market capitalization of around $42 billion, the stock has an average daily trading volume of about 14 million shares. Moreover, Netflix stock trades at a Price to Earnings multiple of nearly 300 times.
Netflix stock is known for its volatile behavior and erratic stock movements. The most recent major stock movement came when the company posted earnings for the second quarter of this year. The stock tanked about 13% following the earnings release as Netflix missed targets for Net Additions.
For 2QFY16, the online media streaming provider projected net additions of subscribers at 2.5 million. However, in actual, 1.7 million members were added. Furthermore, in United States, Netflix managed to add about 0.16 million members, in comparison to the prediction of 0.50 million.
Netflix’s 2QFY16 financial performance was, however, satisfactory. The company’s top-line showed revenue of $2.11 billion, coming in-line with the Wall Street analysts’ consensus estimate of $2.11 billion. In addition to this, online media streaming provider beat the earnings expectations as it posted earnings of $0.09 per share, against the consensus estimate of $0.02.
Following the earnings beat and subscription miss, there was mixed commentary on Netflix stock by the analysts at the Wall Street. Investment firm Piper Jaffray analyst Michael Olson maintained a bullish stance on the stock, despite the company missing subscription targets. Mr. Olson reiterated his Overweight rating on the stock along with a $122 price target on the stock and mentioned that the company’s long-term objectives are intact.
On the other hand, Credit Suisse analyst S. Ju reaffirmed a Neutral rating on the stock, and also lifted the 12-month price target to $122 from $119, following the 2QFY16 earnings release. Additionally, Daniel Salmon of BMO Capital Markets highlighted that introducing contents in local languages in different countries can result in reaccelerated growth, as it would create a positive word-of-mouth, pushing the subscriptions higher in a given country.
Right now, 43 analysts at the Wall Street provide coverage on Netflix stock. Out of these, 22 analysts rate the stock as a Buy, 16 analysts suggest a Hold while the remaining five analysts advocate a Sell. The 12-month consensus price target on the stock is $103.46, which comes with an upside potential of nearly 7% against the stock’s previous close.