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Netflix Shares Upgraded to Buy at BofA – Still the Streaming Leader

Sam Boughedda
Sam Boughedda trader
Updated 16 Nov 2022

Netflix (NASDAQ: NFLX) shares rose 3.65% on Tuesday after the stock was reinstated with a Buy rating and a $370 price target at BofA.

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The price target represented a potential 24% upside from Netflix’s closing price on Monday. The stock is currently trading above the $310 mark after a rally in the last few months, but it is still down over 48% this year.

BofA analyst Reif Ehrlich told investors in a research note that BofA is still the streaming leader, with the firm’s valuation accounting for Netflix’s leading position within the “still burgeoning” shift towards non-linear video viewing, a “strong runway” for subscriber growth outside the US and upside from advertising video on demand. The analyst believes Netflix has a favourable risk/reward.

In late October, Pivotal Research analyst Jeffrey Wlodarczak double upgraded Netflix to Buy, raising the firm’s price target on the stock to a “Street High” of $375 from $200. The upgrade and price target raise was driven by an increase to the analyst’s “admittedly conservative” 2023 net new subscriber forecast to 15 million from 5.5 million, based on his view, the company will triumph in converting a material number of “effective pirates” into paying subscribers. He added that, to a lesser extent, he also took into consideration the short-term subscriber benefits of launching an ad-supported tier.

The analyst continued that he is still concerned about subscriber churn down to ad-supported packages, especially in a recession, but it is unlikely to develop into a potential headwind until the second half of 2023 at the earliest.

Last week, it was reported that Netflix is considering streaming live sports events on its platform and recently bid for the ATP tennis tour streaming rights for some European countries but ended up dropping out, according to The Wall Street Journal.

Sam Boughedda
Sam is a trader and lead stock market writer at AskTraders. After starting his career in the forex market, Sam now focuses on stocks, specifically consumer staples.