Netflix stock (NASDAQ:NFLX) hit a one-month high Monday after Oppenheimer’s new analyst covering the streaming video giant outlined why investors should reinvest.
The Netflix stock (NASDAQ:NFLX) gained 1.5% to $243.63 after falling as much as 1.8% and rising as high as 2.1%.
Market Analysis of Netflix Stock
Analyst Jason Helfstein took up coverage of Netflix stock (NASDAQ:NFLX) and upgraded it to outperform from performing. He set a $325 price objective for the stock, implying a 33% increase from Monday’s closing price.
Not only will the introduction of a lower-cost ad-tier subscription plan entice new users, but Helfstein feels there is a greater possibility of re-engaging those who have already dropped service.
In a letter to clients, Helfstein said, “Ad-tier launch should accelerate subscriber growth, raise ARPU [average revenue per user], and decrease churn.”
He also thinks that Netflix will charge a high cost per thousand (CPM) from advertisers because it still has the largest viewership in the business and that streaming is eroding TV’s market share.
““Netflix generates a sizable viewership for the launching of landmark series, akin to award ceremonies and important athletic events,” Helfstein noted. “In addition, it may opt to release programs in connection with the product launches of significant sponsors.”
He thinks Netflix’s decision to tighten down on password sharing, its relationship with Microsoft Corp. (MSFT) on the ad-supported subscription plan, and its foray into gaming might provide more upside to earnings and the Netflix stock (NASDAQ:NFLX).
With Helfstein’s upgrade, 14 of the 45 FactSet analysts polled are optimistic about Netflix stock (NASDAQ:NFLX), six are pessimistic, and 25 are neutral. 34 of 47 experts were optimistic by the end of 2021, four were pessimistic, and nine were neutral. Over the same period, the average stock price objective has dropped to $244.91 from $681.79.
Meanwhile, Netflix stock (NASDAQ:NFLX) has been on a rampage in recent months, fueled by better-than-expected second-quarter earnings published in July. This came on the heels of a tremendously dismal first-quarter report in April, in which the firm reported losing members for the first time since its inception.
After falling 72.4% year to date to a five-year low of $166.37 on May 11, the stock has subsequently risen 46.4%, while the S&P 500 index (SPX) has lost 0.9%.
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