Netflix stock is rebounding from a post-earnings drop as Wall Street analysts weigh in, positively, on what is next for the streaming platform.
While Netflix reported better-than-expected
second-quarter earnings and offered upbeat forecasts for the current quarter on Thursday evening, the stock sold off on Friday because weakness in the U.S. dollar had boosted the results. Shares dropped 5.1% on Friday.
The stock was up 1.3% to $1,225.55 on Monday afternoon. Several analysts remain optimistic that Netflix can continue to grow, with or without foreign-exchange tailwinds.
“Management indicated that the primary reason for the robust expansion was the depreciation of the dollar versus most other currencies,” Gimme Credit analyst Dave Novosel wrote on Monday. “But subscriber growth, higher pricing, and increased advertising revenue also drove growth.”
Netflix stock has soared 89% over the past 12 months. The company has raised prices several times, introduced a less expensive service that includes ads, and cracked down on people sharing passwords. All that has helped the company achieve consistent double-digit revenue growth.
Still, skeptics say it is inevitable that the streaming company’s growth will slow following several years of impressive gains. And the shares are much more highly valued than the overall market. Netflix is currently trading at 41 times the per-share earnings expected over the next 12 months, compared with 22.3 times for the
S&P 500 .
Still, of the 55 analysts surveyed by FactSet, 36 say the stock is a Buy, 18 rate it at Hold, and one says it is a Sell.
Baird analyst Vikram Kesavabhotla raised his price target on Netflix to $1,500 to $1,300 on Sunday, maintaining an Outperform rating on the stock.
“NFLX offers a compelling platform with a demonstrated track record of delivering high quality content to its users and should benefit from the ongoing secular trend toward streaming,” Kesavabhotla wrote.