Wall Street’s starting to embrace the idea that Netflix Inc. will rally to $500 a share. Credit Suisse analyst Douglas Mitchelson assumed coverage of the stock on Tuesday with an outperform rating and a price target of $500, which implies upside of about 20 percent to the last close. He’s the third analyst out of 45 that sees Netflix breaching the $500 mark, according to Bloomberg data.
Mitchelson, formerly of UBS, cited a favorable content slate and optimism over net ads. He said he sees the company “enjoying unchallenged leadership and disproportionate scale benefit” in the global streaming Subscription Video on Demand (SVOD) marketplace. He added that while valuation “certainly looks very expensive on any traditional measure, we believe a number of visible factors suggest the opposite is true and Netflix is actually quite reasonably priced.”
In other Netflix notes
Stifel reiterated the stock at hold, though lifted its price target to $406 from $345 and predicted domestic subs of 85m by 2025, which is near the high end of management’s long-outstanding 60m-90m target Loop Capital boosted its target to $375 from $330 and reaffirmed its hold rating, calling for a strong quarter but noting shares are “priced to perfection” Wedbush reiterated its underperform rating and price target $125 in a preview note that cited domestic sub softness and cash burn concerns NFLX has 26 buys, 16 holds, 3 sells with average price target $366, according to Bloomberg data, and reports earnings July 16 post-market.
The Credit Suisse note was part of a broader assumption of coverage for 14 telecom and media sectors. Mitchelson said that his most out-of-consensus calls included outperform ratings on Twenty-First Century Fox (M&A bids seen moving higher) and Sirius XM Holdings (no negative catalysts and “powerful” buyback to drive valuation higher); and underperforms on AT&T (challenged growth and returns below cost of capital) and DISH Network (doesn’t expect a sale any time soon.