So, it’s a good news and bad news set up for Netflix (NFLX) right now, as the streaming video giant finds itself in an odd position. A new analyst report is calling for a buy, as things look better than some might think for the streamer. However, investors are selling, as Netflix shares are down around 2.5% in Monday morning’s trading. The word came from Jefferies analyst James Heaney, who believes that Netflix is likely to raise subscription prices once again later this year.
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Such a move would result in higher revenue because not everyone is going to shutter their Netflix account over one price hike. It also helps, Heaney noted, that Netflix’s content slate is looking pretty top-notch. With a new season of Stranger Things coming out soon, along with a sequel to Squid Game, there are reasons to stick around.
Heaney also notes that the recent pullback in Netflix shares is prompting a buying opportunity for investors to get in on the action. Since shares have fallen over 10% in recent days, it’s likely that Netflix can bounce back, especially considering what it’s got on the way. As a result, he assigned a $780 price target.
Overselling Entertainment
Heaney’s assessment comes with a certain amount of risk. While he’s correct in noting that a price hike would mean more revenue for Netflix, that’s only true if it can maintain subscribers. With people increasingly strapped for cash to the point that they’re passing up on fast food and lattes, getting people to stick around as prices surge is not as easy as it once was.
Throw in an increasing universe of free ad-supported television (FAST) platforms, along with other paid streamers, and the notion that Netflix can basically hike prices without consequence looks a little shaky.
Is Netflix a Buy or Sell Today?
Overall, analysts have a Moderate Buy consensus rating on NFLX stock based on 23 Buys, 12 Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 36.46% rally in its share price over the past year, the average NFLX price target of $704.97 per share implies 18.28% upside potential.
