Investors concerned about the fate of streaming giant Netflix (NASDAQ:NFLX) will be able to breathe a little easier today. Netflix gained handily in Thursday’s trading but gave back some of those gains in after-hours trading. Netflix also managed to pull itself off a low tracing back seven weeks with this development.
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The biggest reason was a shift from CFRA, by way of analyst Ken Leon. Leon gave Netflix a double upgrade, going from Sell to Buy. Leon also offered a slew of reasons behind the move. He cited Netflix’s new ad-supported tier, which would represent new revenue streams in two directions. First, from advertising, and second, from pulling in subscribers who may not have been subscribers previously.
Further, he cited the new move to end password sharing, and a slate of new programming options coming soon will also, as Leon puts it, “…benefit subscription and reduce churn.” With new seasons of “The Witcher” and “Squid Game” on tap, that’s a solid assessment.
However, not every analyst is satisfied with Leon’s conclusions. Matthew Harrigan with Benchmark noted that Benchmark’s digital team considers Netflix’s ad-supported tier “…rushed, with unrealistic, above-peer pricing…and certainly limited testing.” Some might also express concern about Netflix’s lack of sports coverage, especially given recent moves in that direction from competitors. But Leon, for his part, notes that sports can be a “big loss leader” that may do more harm than good.
Analysts are somewhat split over Netflix’s potential. Currently, analyst consensus calls Netflix a Moderate Buy. The stock’s average share price target of $303.04 gives it 4.09% upside potential.
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