At Intermission, Wall Street is Watching Netflix for 2H21 Upside

It’s earnings season, and the clear winners of the COVID-19 pandemic are finding it difficult to beat their previous sky-high numbers.

One of which, Netflix, Inc. (NFLX), recently posted mixed Q2 results this Tuesday. However, this does not mean its outlook is gloomy. The video streaming mega-cap is expected to grow subscriber numbers and increase user engagement on rising popularity.

Providing his long-term bullish thesis on the stock, Mark Mahaney of Evercore ISI wrote that Netflix’s “fundamental metrics continue to strengthen,” with its revenues inching past Wall Street expectations.

Mahaney reiterated a Buy rating on the stock, and declared a price target of $635. This target reflects a possible 12-month upside of 23.6%. It was reduced from the previous price target of $655.  

The five-star analyst detailed that per subscriber engagement was up 17% year-over-year, and the company has initiated the buyback of shares. Thus far, it has repurchased 1 million shares at an average price of $500, and has a remaining authorization of $4.5 billion. (See Netflix stock chart on TipRanks) 

The share price has been moving sideways since the beginning of 2021, a sign that the COVID-19 boon has been waning. That being said, Mahaney believes the second half of 2021 will provide an attractive entry point. He even added it to the list of his top 3 mega-caps to go long on, along with the likes of Amazon (AMZN) and Uber (UBER).  

As Netflix moves past its reliance on COVID-19-related subscriber additions, Mahaney wrote that its management expects the company to finish the year with a more “normalized growth trajectory.”  

On TipRanks, NFLX has an analyst rating consensus of Moderate Buy, based on 19 Buy, 7 Hold, and 3 Sell ratings. The average Netflix price target is $604.50, suggesting a possible 12-month upside of 17.7%. Netflix closed trading on Wednesday at a price of $513.63 per share.  

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.