Streaming giant Netflix (NASDAQ: NFLX) is down at the time of writing after the company clocked revenues below forecasts and issued a soft outlook. Netflix posted Q2 revenues of $8.19 billion, up by 2.8% year-over-year but missed consensus estimates by $100 million. However, analysts remain upbeat about the stock.
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Wells Fargo analyst Steven Cahall remained bullish with a Buy rating and a price target of $500, indicating an upside potential of 13.5% at current levels. The analyst pointed out that Netflix’s revenues will likely grow, even as investors remain “over exuberant” on the company’s paid password-sharing initiatives.
Cahall added that the stock’s current drop creates an entry point for “patient, [long-term] investors.” The analyst commented, “Like COVID, in a prolonged Hollywood strike, NFLX likely gains share of engagement. While ad reach is starting slow, NFLX will gain share in ads. Paid sharing means NFLX gains share of global streaming revs. We’re happy to be patient on a share gainer.”
Even with the current Hollywood strike going on, the company is in much financial better shape than its other media peers. The company generated free cash flows of $1.34 billion in Q2 and now expects to generate $5 billion in free cash flows in FY23, up from its prior estimate of $3.5 billion.
Analysts are cautiously optimistic about NFLX stock, with a Moderate Buy consensus rating based on 17 Buys, nine Holds, and two Sells.