It’s not uncommon for analysts to adjust their valuations for publicly traded companies days before earnings are announced.it has been Netflix (NASDAQ:NFLX), the video streaming company’s flag-waving was followed by several adjustments by experts. First quarter results are expected to be announced after the market closes this Thursday.
Forecasters at the more influential white-shoe investment banks significantly increased their price target for Netflix, a move that certainly caught the attention of many Netflix investors. Here’s a quick explanation of this new way of looking at stocks.
A glorious history and a future full of opportunities
Netflix is less than a week away from releasing its quarterly numbers. morgan stanley Analyst Benjamin Swinburne made the move. He feels Netflix stock is now worth $700 per share, a long way from its previous $600 level. He maintained an overweight (i.e. buy) recommendation on the stock.
Swinburne is encouraged by Netflix’s history, noting in his latest research note that the company has deftly pivoted several times over its history (most notably: The company’s transformation from what was essentially a DVD rental service to a streaming video giant).
According to the same analyst, there is ample potential for this to happen in the future as well. Swinburne wrote that the company has several promising revenue streams. These include advertisements, live sports broadcasts, and video games. He believes these opportunities could boost the company’s earnings per share at a compound annual growth rate (CAGR) of more than 25%.
keep rebounding
Netflix has been a huge success since perhaps the worst period for a major entertainment company, when it reported two consecutive quarters of declining subscribers in 2022.
However, it has more than recovered from those issues since then, and its lineup of exclusive content has gone from strength to strength. On top of that, as Swinburne pointed out, there are new(ish) potentially very powerful revenue streams available. With that in mind, his optimism about stocks feels justified.
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Eric Volkman has no position in any stocks mentioned. The Motley Fool has a position in and recommends Netflix. The Motley Fool has a disclosure policy.
Will Netflix stock price reach $700? 1 Wall Street analysts think so.Originally published by The Motley Fool
