Two sell-side analysts are providing bullish forecasts on stock giants Tesla Motors Inc (NASDAQ:TSLA) and Netflix, Inc. (NASDAQ:NFLX). From Morgan Stanley’s standpoint, with a new political climate, now is the time to back Tesla full steam. Meanwhile, for Cantor, after an incredible Netflix fourth-quarter performance and the best net subscription addition quarter of all time for the company, the giant is giving plenty of reasons for investors to cheer today.
Tides Are Changing for Tesla
Morgan Stanley analyst Adam Jonas sees the market’s odds shifting to weighing in Tesla’s favor and subsequently has turned bullish on the stock. Therefore, the analyst upgrades from an Equal Weight to an Overweight rating on shares of TSLA while raising the price target from $242 to $305, which represents a 25% increase from where the stock is currently trading.
For Jonas, there are four fundamental reasons to become confident on the electric car giant’s prospects moving forward.
First, the analyst explains, “We have revised Model 3 launch timeline and volume estimate, with a significant positive impact on earnings and our price target.”
Second, the analyst recognizes a positive shift towards TSLA’s advantage, noting, “The market is moving Tesla’s way on EVs.”
Third, Jonas’s apprehensions have diminished, as he opines, “A recent pull back in efforts by tech firms to make complete vehicles represents a sea change in competitive pressure that we felt represented a great concern to Tesla over the past 2 years.”
Fourth, politically, the analyst believes Tesla could have a winning hand under Trump’s power, predicting, “Gigamerica: Tesla stands at the epicenter of US high tech manufacturing job creation which may benefit more than just symbolically under the new administration.”
Between a “surprisingly supportive political environment” coupled with the “strategic relationship between Tesla leadership and the new administration,” Jonas concludes that all signs point to success ahead for the giant.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, four-star analyst Adam Jonas is ranked #486 out of 4,355 analysts. Jonas has a 49% success rate and realizes 9.4% in his annual returns. When recommending TSLA, Jonas yields 31.5% in average profits on the stock.
TipRanks analytics demonstrate TSLA as a Hold. Out of 15 analysts polled by TipRanks in the last 3 months, 6 are bullish on Tesla stock, 6 remain sidelined, and 3 are bearish on the stock. With a loss potential of nearly 4%, the stock’s consensus target price stands at $235.00.
Netflix’s Impressive Quarter Beat
On back of what Cantor top analyst Youssef Squali deems Netflix’s “best quarter ever for customer net additions,” released yesterday evening, the analyst is out singing the video streaming giant’s praises today.
Commending customer net additions for being a driving force behind “a beat on virtually every metric,” the analyst reiterates an Overweight rating on NFLX while lifting the price target from $135 to $160, which represents a 14% increase from where the shares last closed.
For the fourth quarter, the giant’s revenues hit $2,477.5 million, EBIDTA of $211.8 million, and GAAP EPS of $0.15, topping StreetAccount consensus respective expectations of $2,470 million, $185.8 million, and $0.13. Meanwhile, streaming revenue growth accelerated 41% year-over-year, which the analyst applauds as “impressive,” along with rises in international streaming revenue of 67% and domestic streaming revenue of 27%, which the analyst attributes to “stronger-than-expected subscriber acquisition in both US and international.”
Moreover, in NFLX’s most massive net subscription addition quarter in its history, the giant added 7.050 million net streaming sub adds this quarter, outperforming both consensus of 5.170 million as well as guidance that called for 5.200 million. From the analyst’s eyes, this momentum will not be slowing down any time soon, as he believes, ” We expect Netflix to approach 100M subs by end of 1Q17.”
Squali asserts, “Notably, management believes some pull forward into 4Q16 from 1Q17 is likely (helped by healthy rejoins), with greater sub growth anticipated in 2H17 as audiences build around a strong slate of shows throughout the year.”
Overall, “The company’s model of launching high-quality originals, rolling out the service worldwide on a massive scale, localizing content and instituting price hikes when appropriate has been working, fueling strong Y/Y growth, which we view as sustainable. While the US segment is maturing, its profitability is exceeding expectations; international on the other hand, remains on a steep growth trajectory as global demand for OTT video remains massive. NFLX’s long-term value creation potential, leadership position, global scale and singular focus keep us positive on the stock,” Squali contends.
As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, top five-star analyst Youssef Squali has achieved a high ranking of #31 out of 4,355 analysts. Squali upholds a 71% success rate and gains 12.8% in his yearly returns. When recommending NFLX, Squali garners 46.5% in average profits on the stock.
TipRanks analytics indicate NFLX as a Buy. Based on 33 analysts polled by TipRanks in the last 3 months, 20 rate a Buy on NFLX stock, 11 maintain a Hold, while 2 issue a Sell. The 12-month average price target stands at $153.61, marking a 9% upside from where the stock is currently trading.