Netflix (NASDAQ:NFLX) Shares Down 2% on Analyst Downgrade

Key Points

• Netflix shares fell 2% after Seaport Research Partners downgraded the stock from buy to neutral, with the stock trading as low as $66.69 on heavier-than-usual volume.
• Analyst sentiment remains mixed: while several firms kept bullish ratings and some raised targets, the overall consensus is still Moderate Buy with an average price target of $104.21.
• Netflix’s latest earnings showed EPS of $0.80, slightly beating estimates, and revenue growth of 13.4% year over year, even as concerns persist about weaker guidance, margins, and free cash flow.

Netflix, Inc. (NASDAQ:NFLX - Get Free Report)'s share price dropped 2% on Monday after Seaport Research Partners downgraded the stock from a buy rating to a neutral rating. The company traded as low as $66.69 and last traded at $67.60. Approximately 60,421,264 shares were traded during trading, an increase of 31% from the average daily volume of 46,003,379 shares. The stock had previously closed at $68.95.

A number of other research analysts also recently commented on the company. Piper Sandler reissued an "overweight" rating and issued a $85.00 price target (down from $115.00) on shares of Netflix in a report on Friday. CLSA initiated coverage on Netflix in a report on Monday. They set an "outperform" rating on the stock. Sanford C. Bernstein set a $95.00 target price on Netflix and gave the company an "outperform" rating in a research report on Friday. Rosenblatt Securities set a $75.00 target price on Netflix and gave the company a "neutral" rating in a research note on Friday. Finally, Weiss Ratings downgraded shares of Netflix from a "hold (c+)" rating to a "hold (c)" rating in a research report on Friday, June 26th. Two analysts have rated the stock with a Strong Buy rating, thirty-four have given a Buy rating, seventeen have assigned a Hold rating and one has issued a Sell rating to the company. According to MarketBeat.com, the company currently has a consensus rating of "Moderate Buy" and a consensus target price of $104.21.

Insider Transactions at Netflix

In other Netflix news, Director Reed Hastings sold 386,700 shares of the company's stock in a transaction that occurred on Monday, June 1st. The stock was sold at an average price of $85.97, for a total transaction of $33,244,599.00. Following the sale, the director owned 3,940 shares in the company, valued at $338,721.80. This represents a 98.99% decrease in their ownership of the stock. The sale was disclosed in a filing with the SEC, which is available through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, insider David A. Hyman sold 5,722 shares of the stock in a transaction that occurred on Tuesday, May 5th. The stock was sold at an average price of $88.08, for a total value of $503,993.76. Following the transaction, the insider directly owned 316,100 shares in the company, valued at approximately $27,842,088. This represents a 1.78% decrease in their position. The disclosure for this sale is available in the SEC filing. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Insiders sold 899,839 shares of company stock valued at $80,141,661 over the last 90 days. Corporate insiders own 1.24% of the company's stock.

More Netflix News

Here are the key news stories impacting Netflix this week:

• Positive Sentiment: Some analysts turned bullish after the sell-off, arguing that Netflix’s long-term growth drivers — including advertising, international revenue, and live events — are intact, and that the post-earnings drop may have created an attractive entry point. Why Netflix Stock Got an Upgrade After Earnings Slump
• Positive Sentiment: Phillip Securities upgraded Netflix to Buy, saying engagement does not appear to be slowing and setting a $110 target, reinforcing the view that the recent decline may be overdone. Netflix Stock Forecast Gets Hiked from Hold to Buy as Analyst Sees ‘No Signs of Slowing Engagement’
• Positive Sentiment: Several bullish commentaries argue the stock’s sharp drop has pushed valuation to levels that may appeal to long-term investors who believe Netflix remains the streaming leader. Netflix Crashes to a 52-Week Low After Earnings. Why This Is the Best Time to Buy NFLX Stock.
• Neutral Sentiment: Netflix returned to the bond market for the first time in two years, a financing move that is notable but not clearly positive or negative for the stock by itself. Netflix returns to the bond market for the first time in two years
• Negative Sentiment: Netflix’s weak Q3 guidance and slower growth outlook have prompted multiple analyst cuts, including lower price targets from firms such as UBS, Wedbush, TD Cowen, and Pivotal Research, which is weighing on sentiment. Why Is Netflix Stock Falling Monday?
• Negative Sentiment: Investors are also worried about softer margin trends, lower free cash flow, and reduced transparency around engagement data, all of which add to the case for a more cautious near-term view. Why Netflix Stock Fell This Past Week

Institutional Trading of Netflix

Several institutional investors have recently added to or reduced their stakes in the business. Imprint Wealth LLC bought a new position in Netflix in the third quarter worth about $25,000. Wealth Watch Advisors INC bought a new position in shares of Netflix during the third quarter valued at approximately $103,000. Strategic Wealth Investment Group LLC acquired a new stake in shares of Netflix during the 2nd quarter worth approximately $121,000. Wiser Advisor Group LLC acquired a new stake in shares of Netflix during the 3rd quarter worth approximately $114,000. Finally, Beaird Harris Wealth Management LLC lifted its holdings in shares of Netflix by 9.6% in the 3rd quarter. Beaird Harris Wealth Management LLC now owns 114 shares of the Internet television network's stock worth $137,000 after purchasing an additional 10 shares during the last quarter. Institutional investors own 80.93% of the company's stock.

Netflix Trading Down 2.0%

The company has a debt-to-equity ratio of 0.39, a quick ratio of 1.41 and a current ratio of 1.14. The firm has a fifty day moving average of $80.15 and a 200-day moving average of $86.85. The firm has a market cap of $284.65 billion, a P/E ratio of 21.28, a P/E/G ratio of 0.88 and a beta of 1.52.

Netflix (NASDAQ:NFLX - Get Free Report) last posted its earnings results on Thursday, July 16th. The Internet television network reported $0.80 earnings per share (EPS) for the quarter, beating analysts' consensus estimates of $0.79 by $0.01. Netflix had a return on equity of 40.02% and a net margin of 28.22%.The company had revenue of $12.56 billion for the quarter, compared to analysts' expectations of $12.58 billion. During the same period last year, the business posted $0.72 earnings per share. The firm's quarterly revenue was up 13.4% compared to the same quarter last year. Equities research analysts forecast that Netflix, Inc. will post 3.6 earnings per share for the current year.

Netflix Company Profile

Netflix, Inc NASDAQ: NFLX is a global entertainment company that provides subscription-based streaming of films, television series, documentaries and other video content. Founded in 1997 by Reed Hastings and Marc Randolph and headquartered in Los Gatos, California, the company began as a DVD-by-mail rental service and introduced streaming video in 2007. Netflix later expanded into producing and distributing original programming, beginning notable original hits in the 2010s, and now operates a content production and distribution ecosystem alongside its licensing activity.

The company's primary product is its on-demand streaming service, which can be accessed on a wide range of internet-connected devices and delivered through a suite of apps and web platforms.

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