Netflix Analysts’ Surprise Move: Higher Price Target
(Bloomberg) -- All five FAANG stocks have seen pronounced weakness over the past several weeks, as investors reevaluate their current valuations in light of the outlook for future growth, stirred by the latest quarterly reports. But, by one measure at least, analysts have grown more positive on one of them: Netflix Inc.
The average price target on Netflix has popped 5.2 percent since its Oct. 16 results, according to Bloomberg data, and currently sits at a record $400, implying upside of nearly 40 percent from current prices. That higher target has come despite Netflix slumping 17 percent since its results. History shows that analyst price targets tend to shadow a stock move in either direction.
Among the most notable increases, BofAML lifted its Netflix target to $440 from $410, while UBS boosted its own to $400 from $365. Last week, Buckingham Research raised its target to $406 from $349 but said its bull-case scenario implied a $531 target.
Maybe that’s because while Netflix suffered in the recent technology rout, it stood out from the other FAANG stocks -- Facebook, Amazon, Apple, and Google-parent Alphabet -- by posting results that were largely ahead of expectations.
In contrast, Facebook for most of 2018 has cautioned investors about its growth potential at the same time as investors grapple with the prospect of new government regulations. And both Amazon and Alphabet gave disappointing outlooks, while Apple raised concerns about the future demand for iPhones.
Facebook’s average target has dropped 5.7 percent since its Oct. 30 results, while Alphabet’s is down 2.8 percent since Oct. 25. Apple’s average price target is down 2.7 percent since Nov. 1. Amazon’s has only declined by 0.5 percent as analysts continue to tout its long-term growth outlook. On Thursday, Piper Jaffray likened it to a “champagne stock on a beer budget,” anticipating “material appreciation” over the next year or two.
Despite the lower targets, a solid majority of analysts continue to rate each FAANG stock a buy.
©2018 Bloomberg L.P.