Netflix (NASDAQ:NFLX) Downgraded by HSBC to Hold

Key Points

• HSBC downgraded Netflix from “Buy” to “Hold” and set a $76 price target, implying only 3.6% upside from the stock’s current price.
• Despite the downgrade, analysts’ consensus remains “Moderate Buy”, with an average price target of $95.51; Netflix recently exceeded quarterly EPS estimates and reported 13.4% year-over-year revenue growth.
• Netflix shares opened at $73.36, while company insiders—including the CEO and CFO—recently sold shares. Institutional investors remain major holders, owning approximately 80.93% of the stock.

Netflix (NASDAQ:NFLX - Get Free Report) was downgraded by analysts at HSBC from a "buy" rating to a "hold" rating in a research note issued to investors on Tuesday, MarketBeat Ratings reports. They currently have a $76.00 target price on the Internet television network's stock. HSBC's target price points to a potential upside of 3.60% from the company's current price.

Other analysts have also recently issued research reports about the company. New Street Research upped their price objective on Netflix from $96.00 to $102.00 and gave the company a "neutral" rating in a research note on Friday, July 17th. Rothschild & Co Redburn lowered their price target on Netflix from $120.00 to $93.00 and set a "buy" rating for the company in a report on Tuesday, July 21st. Wolfe Research reissued an "outperform" rating and set a $95.00 price target (up from $84.00) on shares of Netflix in a research report on Tuesday, August 25th. JPMorgan Chase & Co. restated a "buy" rating on shares of Netflix in a research note on Thursday, August 20th. Finally, Oppenheimer set a $85.00 target price on shares of Netflix and gave the company an "outperform" rating in a research note on Friday, July 17th. Four equities research analysts have rated the stock with a Strong Buy rating, thirty-three have given a Buy rating, sixteen have assigned a Hold rating and two have assigned a Sell rating to the stock. According to data from MarketBeat.com, the company has an average rating of "Moderate Buy" and an average price target of $95.51.

Netflix Stock Up 2.2%

Shares of NASDAQ:NFLX opened at $73.36 on Tuesday. The firm has a market cap of $305.47 billion, a PE ratio of 23.09, a price-to-earnings-growth ratio of 1.01 and a beta of 1.53. The company has a fifty day simple moving average of $75.81 and a 200 day simple moving average of $83.86. The company has a current ratio of 1.14, a quick ratio of 1.14 and a debt-to-equity ratio of 0.39. Netflix has a 12-month low of $65.08 and a 12-month high of $124.86.

Netflix (NASDAQ:NFLX - Get Free Report) last posted its quarterly earnings data on Thursday, July 16th. The Internet television network reported $0.80 EPS for the quarter, beating analysts' consensus estimates of $0.79 by $0.01. Netflix had a net margin of 28.22% and a return on equity of 40.02%. The firm had revenue of $12.56 billion for the quarter, compared to the consensus estimate of $12.58 billion. During the same period in the prior year, the firm posted $0.72 EPS. The firm's revenue was up 13.4% compared to the same quarter last year. On average, equities research analysts anticipate that Netflix will post 3.59 EPS for the current fiscal year.

Insider Buying and Selling

In other news, CEO Theodore Sarandos sold 105,850 shares of the stock in a transaction on Monday, August 3rd. The stock was sold at an average price of $73.03, for a total transaction of $7,730,225.50. Following the completion of the sale, the chief executive officer owned 206,266 shares in the company, valued at approximately $15,063,605.98. This represents a 33.91% decrease in their position. The sale was disclosed in a legal filing with the Securities & Exchange Commission, which is accessible through this hyperlink. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, CFO Spencer Neumann sold 9,248 shares of the firm's stock in a transaction on Monday, August 10th. The stock was sold at an average price of $75.79, for a total value of $700,905.92. Following the sale, the chief financial officer directly owned 73,787 shares of the company's stock, valued at approximately $5,592,316.73. This represents a 11.14% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. Insiders have sold 179,045 shares of company stock valued at $13,132,194 in the last three months. Insiders own 1.24% of the company's stock.

Institutional Trading of Netflix

Several institutional investors and hedge funds have recently bought and sold shares of the stock. Altar Rock LLC boosted its holdings in shares of Netflix by 10.6% in the second quarter. Altar Rock LLC now owns 4,343 shares of the Internet television network's stock worth $310,000 after buying an additional 415 shares during the period. Security National Bank of SO Dak boosted its stake in Netflix by 462.0% in the 2nd quarter. Security National Bank of SO Dak now owns 14,725 shares of the Internet television network's stock worth $1,051,000 after purchasing an additional 12,105 shares during the period. Security National Bank of Sioux City Iowa IA purchased a new position in Netflix during the 2nd quarter worth approximately $1,195,000. Anchor Investment Management LLC grew its position in Netflix by 1.9% during the second quarter. Anchor Investment Management LLC now owns 71,185 shares of the Internet television network's stock valued at $5,083,000 after purchasing an additional 1,315 shares in the last quarter. Finally, Smith Chas P & Associates PA Cpas increased its stake in Netflix by 34.3% in the 2nd quarter. Smith Chas P & Associates PA Cpas now owns 3,718 shares of the Internet television network's stock valued at $265,000 after buying an additional 950 shares during the period. Institutional investors and hedge funds own 80.93% of the company's stock.

Key Stories Impacting Netflix

Here are the key news stories impacting Netflix this week:

• Positive Sentiment: Pershing Square disclosed an approximately $1 billion Netflix position, signaling that investor Bill Ackman sees a potential recovery despite previously losing money on the stock in 2022. The investment may improve sentiment around Netflix’s valuation and long-term growth prospects. Ackman Bets $1 Billion on Netflix Redemption After $400 Million 2022 Loss
• Positive Sentiment: An analyst argued that “a heck of a lot of bad news” is already priced into Netflix, supporting a contrarian case for the shares. Netflix continues to post double-digit revenue growth and has announced a substantial share-repurchase program, which could provide valuation support. Netflix Stock Has a Heck of a Lot of Bad News Priced In
• Neutral Sentiment: Netflix’s decision to stay out of Paramount Skydance’s potential acquisition of Warner Bros. Discovery avoids the cost, leverage and integration risks of a major content deal. However, it also means Netflix will not gain direct access to Warner Bros. Discovery’s content assets, while Paramount and WBD shares benefited from progressing transaction talks.
• Negative Sentiment: Wells Fargo downgraded Netflix to Underweight from Equal Weight and cut its price target to $57 from $80, citing concerns about user engagement and the stock’s weakening momentum. The target implies substantial downside from recent levels. Wells Fargo Cuts Netflix to Underweight
• Negative Sentiment: Other coverage highlights intensifying competition from rival streaming platforms and difficulty producing consistent hit content. Netflix’s sharp post-earnings decline and upcoming third-quarter report on October 20 leave investors focused on engagement, subscriber trends and the company’s outlook.

About Netflix

Netflix, Inc NASDAQ: NFLX is a global entertainment company that provides subscription-based streaming access to television series, films, documentaries and other video content. Its service includes Netflix-produced and licensed programming, with offerings that may vary by market. The company also provides an advertising-supported plan in selected countries and has expanded into mobile games and other interactive entertainment.

Netflix was founded in 1997 by Reed Hastings and Marc Randolph as a DVD-by-mail rental service in the United States.

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