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Netflix (NFLX): Next Stop, $460?


Of all the widely followed and top-performing FANG stocks, Netflix (NASDAQ:NFLX) has shot the lights out in terms of share price performance. After a week when the macro news flow could have resulted in a near-term pause in Netflix’s shares, the stock has jumped 9%.

Today, NFLX gets another vote of confidence from Monness’ top analyst Brian White, who reiterates a Buy rating on the stock, and raises his price target to $460 (from $375), which implies an upside of 16% from current levels.

“As Netflix continues to aggressively invest back into the business with new content, the company’s operating margins remain well below the company’s long-term operating margin target at maturity, White wrote. “The combination of engaging new content, momentum in overseas markets and a business model that scales globally increasingly sets Netflix apart from its legacy competitors. Moving forward, we believe the market will reward Netflix with further multiple expansion.”

“Longer term, there is a massive broadband subscriber market that is untapped and ripe for a streaming service such as Netflix. For example, Netflix estimates there are approximately 700 million fixed broadband subscribers in the world (excluding China) and Point Topic estimates there will be 1.07 billion (including China) global fixed broadband subscribers by the end of 2022,” the analyst added.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Brian White has a yearly average return of 18% and a 70% success rate. White has a 28.5% average return when recommending NFLX, and is ranked #87 out of 4829 analysts.

TipRanks points to early analyst sentiment split between confidence and caution on Netflix shares. Out of 31 analysts polled in the last 3 months, 18 rate a Buy on Netflix stock, 12 issue a Hold, and 1 recommends a Sell. However, taking under the analysts’ expectations, is this stock overvalued or undervalued? Notably, the consensus average price target stands at $350.86, marking an 11% downside potential from current levels.