Netflix Stock (NASDAQ:NFLX)
On Wednesday, the streaming behemoth Netflix (NASDAQ:NFLX) announced a mixed first quarter and gave a lukewarm forecast, resulting in a mixed response from Wall Street. Netflix stock dropped by about 3% in early trade.
In light of these findings, UBS analyst John Hodulik raised Netflix stock to buy from neutral and predicted that the business will have “sustained double-digit profit growth” and a significant rise in free cash flow.
Hodulik said that Netflix would benefit from this scenario, allowing the company to increase subscribers and pricing power “while keeping a lid on content costs” over the next several years. Those expenditures are also predicted to be a major “swing factor” influencing Netflix’s profitability and free cash flow over the next several years.
Hodulik also noted that the company’s “performance is inflecting,” with revenue and margins both likely to rise. At the same time, content investment remains “relatively stable.” New revenue-driving efforts include paid sharing and the advertising-supported tier.
Hodulik also predicted that the second half of the year will increase Netflix subscribers to over 12 million, partly thanks to paid-sharing and the lower-cost ad tier.
After the results, Goldman Sachs analyst Eric Sheridan maintained his sell recommendation on Netflix despite the fact that paid-sharing and the ad tier have the potential to increase customers and profitability in the long run.
Hodulik said that the 39% increase in the NFLX stock price over the last six months compares unfavorably to the 12% increase in the S&P 500 (SP500) and that “we see a lot of the forward operating momentum already priced into Netflix shares.”
Citi analyst Jason Bazinet, who has a buy rating and a $400 price target on Netflix stock, said the company will likely be affected soon due to the poor outlook.
Based on this information, “we would not be surprised to see shares trade a tad lower,” Bazinet said in a research report.
Walt Disney, Roku, and FuboTV stocks all dropped in unison.
At its earnings conference, Netflix said that it would boost the rate at which it buys back its shares and that its password-sharing project would be rolled out internationally.
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Author Shariq Khan 
