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Deutsche Bank set its price target for the streaming leader at $95 on Tuesday. This is slightly above the $91 average target across all Wall Street firms. While the stock has dropped about 25 percent this year, analysts generally expect it to climb back toward those levels as the company grows its advertising business and adds live sports like NFL games.
Source: Deutsche Bank
HSBC lowered its rating on Netflix from a buy to a hold on Tuesday. This move follows a similar downgrade from Wells Fargo last week, suggesting that some analysts are becoming more cautious about the company's path forward.
While the average analyst target for the stock is still about $92, which is higher than where it trades today, these back-to-back downgrades reflect concerns that the stock may have less room to grow in the near term. For a long-term owner, this doesn't change the fact that Netflix is the only major streamer making a significant profit, but it shows that Wall Street is questioning how much faster the company can grow from here.
Wells Fargo changed its stance on the stock, moving from a neutral rating to underweight. This is a signal that the firm expects the stock to perform worse than the broader market. Along with the downgrade, analysts slashed their price target for the shares by about 29 percent.
The move comes as the stock fell about 5 percent on Friday morning. While one analyst's view does not change the company's actual business, a downgrade from a major firm like Wells Fargo often weighs on the stock price as it can influence how other large investors see the company's near-term path.
Netflix's content chief said the company is open to bidding on a package of international NFL games when the league's media rights next become available. This follows the company's broader push into live events, which are designed to keep members from canceling and to attract more advertisers.
Live sports are a key part of the plan to grow the advertising business. Because sports happen in real time, they force viewers to watch commercials that they might otherwise skip during a recorded show. Securing more NFL games would help Netflix compete for the massive ad budgets that usually go to traditional TV networks.
Source: CNBC
Netflix has teamed up with Amazon and YouTube to form the Streaming Access and Choice Alliance. This group will advocate for policies that protect how people find and watch content online. While this is a common move for large tech companies to protect their interests, it is a minor development for the business itself. It shows the major players are aligning to influence rules around digital distribution as streaming becomes the primary way people watch television.
Source: WSJ
Management consistently clears the bar they set by a tiny margin, showing they have a tight grip on the numbers and rarely surprise the market.
| Expectation | |
|---|---|
| EPS | $0.82 |
| Revenue | $12.87B |