IBD Stock Analysis
- Shares briefly touched a buy point of 557.49 out of double-bottom base
- MarketSmith charts identified another buy point at 575.47 out of consolidation
- Composite Rating is 98 out of 99. Relative Strength Rating now stands at 88
Industry Group Ranking
* Not real-time data. All data shown was captured at 4:39PM EDT on 10/14/2020.
Netflix (NFLX) is the IBD Stock Of The Day as the leading subscription video-on-demand service gains customers during the Covid-19 pandemic, which has limited movie theaters and other entertainment options. Netflix stock hit a buy point on Wednesday.
The Los Gatos, Calif.-based company plans to report third-quarter results on Tuesday. Wall Street analysts are looking for another solid quarter as Netflix delivers a steady stream of fresh movies and TV series to keep homebound viewers entertained during the health crisis.
Netflix’s new content in the third quarter included the second season of popular series “The Umbrella Academy” and buzzworthy movies such as “The Old Guard,” “Enola Holmes” and “The Devil All the Time.”
For the September quarter, Netflix had forecast adding 2.5 million new subscribers. In the June quarter, it added 10.09 million new subscribers worldwide, bringing its global total to 192.95 million subscribers.
Netflix Stock Eyes Multiple Buy Points
Netflix predicted third-quarter earnings of $2.09 a share on sales of $6.33 billion. In the year-earlier period, Netflix earned $1.47 a share on sales of $5.24 billion.
In intraday trading on the stock market today, Netflix stock touched a buy point of 557.49 out of double-bottom base. Aggressive investors could have started a position on Tuesday as Netflix stock cleared a downward-sloping trend line.
Netflix stock dropped 2.3% to close at 541.45 Wednesday. Earlier in the session, it climbed as much as 3.3% to 572.49.
Netflix Scores Two Price-Target Hikes
On Wednesday, two Wall Street firms raised their price targets on Netflix stock.
Cowen reiterated its outperform rating on Netflix and lifted its price target to 625 from 550. Goldman Sachs kept its buy rating on Netflix stock and upped its price target to 670 from 600.
In a note to clients, Cowen analyst John Blackledge said his firm’s survey data indicates that Netflix could raise prices without much churn. Netflix last raised U.S. prices beginning in January 2019, with most increases completed by the second quarter of last year.
“Increased pricing power leaves the company well-positioned to raise (prices) as we head into 2021 and beyond, notwithstanding recent price increases in Canada and Mexico, among other markets,” Blackledge said.
Goldman Sachs analyst Heath Terry said he expects Netflix to add 6 million subscribers with its third-quarter report. He said Netflix has successfully fended off a wave of new competition. Those rivals include Peacock from Comcast (CMCSA)-owned NBCUniversal and HBO Max from AT&T (T)-owned WarnerMedia.
Exclusive IBD Ratings On Netflix Stock
Netflix stock ranks No. 13 on the IBD 50 list of top-performing growth stocks.
It has a near-perfect IBD Composite Rating of 98 out of 99, according to the IBD Stock Checkup tool. The Composite Rating — an easy way to identify top growth stocks — is a blend of key fundamental and technical metrics to help investors gauge a stock’s strengths.
Netflix stock has an IBD Relative Strength Rating of 88 out of 99. That means it has outperformed 88% of stocks over the past 12 months. The best growth stocks typically have RS Ratings of at least 80.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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