Netflix, Amazon and Nvidia Get Street-High Targets on Covid Lift

A trio of companies that have been favorite plays throughout the pandemic all received Street-high price targets from analysts on Friday, a sign that some on Wall Street see further upside after pronounced rallies.

Netflix Inc., Amazon.com Inc. and Nvidia Corp., whose chips are used in cloud computing and gaming, are all viewed as being well positioned with the coronavirus accelerating long-term growth trends as more consumers shop online and stay at home for entertainment.

All three stocks are up at least 65% thus far this year; Nvidia has risen almost 80%. The S&P 500 is in slightly negative territory for the year.

Netflix, Amazon and Nvidia Get Street-High Targets on Covid Lift

Goldman Sachs lifted its Netflix target to $670 from $540, contributing to an 8.6% gain in Friday’s session. The firm wrote that the pandemic was “accelerating the shift” to streaming content, away from traditional TV, and that the company’s content library and distribution would “serve to steepen Netflix’s growth curve both in the immediate and long term.”

The comments come ahead of the July 16 release of Netflix’s second-quarter results, and at a time when analysts have been growing more cautious about the company’s valuation. Currently, the average price target on Netflix shares stands near $462, implying downside of 16% from current levels.

Recently, Rosenblatt Securities wrote that it “struggle[s] to see the upside” from current levels given “uncertainty over how [long] this favorable environment will last.” Imperial Capital downgraded the stock earlier this week.

Amazon’s price target hike -- to $3,550 from $2,700 -- came from Citi, and was credited to the “powerful, long-term tailwind” of faster e-commerce growth. The firm expects Amazon will comprise 43% of the domestic e-commerce market by 2022, up from 38% in 2019, and nearly 7% of total U.S. retail sales by 2022, up from 4% last year. Shares of Amazon rose 0.2% on Friday.

While Amazon has been a consensus favorite during the pandemic, the stock has gotten ahead of analysts targets. The average target is about $2,850, more than 10% below current levels. According to an analysis of Bloomberg data, the degree to which the share price exceeds the average target is near a multi-year high.

Rosenblatt Securities raised its Nvidia target to $500 from $400, touting the long-term growth potential of its datacenter and gaming chips. The stock was little changed but it is coming off an eight-day advance, the latest leg of a rally that took Nvidia above Intel Corp. in market capitalization.

The average price target on Nvidia is $391, implying downside of about 7% from current levels.

©2020 Bloomberg L.P.

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