Netflix (NASDAQ:NFLX) Shares Climb 4.7% - Should You Buy?

Key Points

• Netflix shares rose 4.7% to $66.39, with trading volume 16% above its average session volume.
• Analysts have a Moderate Buy consensus and an average price target of $89.14, though several firms recently downgraded the stock or reduced targets.
• Latest quarterly results showed EPS above estimates and revenue growth of 11.9% year over year; however, reports cite slowing growth and cautious guidance as risks.

Netflix, Inc. (NASDAQ:NFLX - Get Free Report)'s share price traded up 4.7% on Wednesday. The company traded as high as $66.78 and last traded at $66.39. 49,502,511 shares were traded during mid-day trading, an increase of 16% from the average session volume of 42,782,328 shares. The stock had previously closed at $63.42.

Netflix News Roundup

Here are the key news stories impacting Netflix this week:

• Positive Sentiment: An investor-focused article points to record profits, nearly $5 billion in share buybacks, and deals with Disney and the NFL as evidence of Netflix’s expanding business and capital returns. Those strengths contrast with the shares’ recent weakness, though the article does not cite a fresh earnings announcement. Netflix Is Playing a Bigger Game. Investors Should Take Notice
• Positive Sentiment: Netflix hired former Google executive Darshan Kantak as vice president of its ads platform. His adtech experience could help the company develop advertising into a stronger source of revenue, although the report gives no new financial targets. Netflix just hired an adtech operator who knows how to solve 'gnarly problems'
• Neutral Sentiment: Netflix is testing an “AI Discover” tab with recommendations based on viewers’ moods. Better discovery could support engagement and retention, but it is an early experiment with no demonstrated impact on subscribers or revenue yet. Netflix's new AI Discover tab helps you find something to watch based on your mood
• Negative Sentiment: A valuation analysis says Netflix shares have fallen sharply from their peak amid slower revenue growth and uninspiring guidance. While the article notes the stock trades below 17 times next year’s earnings, the growth concerns help explain why investors may be cautious despite the lower valuation. Netflix Trades at a Discount to the S&P 500's Valuation. Is It Deserved?

Wall Street Analysts Forecast Growth

NFLX has been the subject of a number of recent research reports. UBS Group set a $90.00 target price on Netflix in a research report on Wednesday, October 21st. HSBC lowered Netflix from a "buy" rating to a "hold" rating and lowered their price objective for the stock from $96.00 to $76.00 in a research report on Tuesday, September 22nd. Needham & Company LLC cut Netflix from a "buy" rating to a "hold" rating in a report on Wednesday, October 21st. Wells Fargo & Company downgraded shares of Netflix from a "neutral" rating to an "underweight" rating and cut their target price for the company from $80.00 to $57.00 in a research report on Friday, September 18th. Finally, China Renaissance reduced their target price on shares of Netflix from $100.00 to $80.00 and set a "hold" rating on the stock in a research note on Friday, July 17th. Two equities research analysts have rated the stock with a Strong Buy rating, thirty-five have issued a Buy rating, seventeen have given a Hold rating and two have issued a Sell rating to the company's stock. According to MarketBeat.com, the company presently has a consensus rating of "Moderate Buy" and an average target price of $89.14.

Netflix Stock Up 4.7%

The firm has a market capitalization of $272.66 billion, a price-to-earnings ratio of 19.19, a P/E/G ratio of 0.91 and a beta of 1.62. The business's 50-day moving average is $72.00 and its two-hundred day moving average is $81.31. The company has a debt-to-equity ratio of 0.43, a quick ratio of 1.07 and a current ratio of 1.07.

Netflix (NASDAQ:NFLX - Get Free Report) last released its quarterly earnings data on Tuesday, October 20th. The Internet television network reported $0.87 earnings per share for the quarter, topping the consensus estimate of $0.82 by $0.05. Netflix had a net margin of 29.69% and a return on equity of 42.69%. The business had revenue of $12.87 billion for the quarter, compared to analyst estimates of $12.87 billion. During the same quarter last year, the firm earned $0.59 EPS. Netflix's quarterly revenue was up 11.9% compared to the same quarter last year. On average, equities analysts anticipate that Netflix, Inc. will post 3.59 earnings per share for the current year.

Insider Activity

In other Netflix news, CEO Gregory K. Peters sold 27,312 shares of the business's stock in a transaction dated Thursday, August 6th. The stock was sold at an average price of $73.54, for a total value of $2,008,524.48. Following the completion of the transaction, the chief executive officer directly owned 120,931 shares of the company's stock, valued at approximately $8,893,265.74. The trade was a 18.42% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is accessible through the SEC website. Also, Director Richard N. Barton sold 720 shares of the stock in a transaction dated Thursday, September 10th. The stock was sold at an average price of $75.27, for a total value of $54,194.40. Following the completion of the sale, the director owned 2,460 shares of the company's stock, valued at $185,164.20. This trade represents a 22.64% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders have sold 55,980 shares of company stock worth $3,970,756 in the last 90 days. Corporate insiders own 1.24% of the company's stock.

Hedge Funds Weigh In On Netflix

Several institutional investors and hedge funds have recently modified their holdings of the business. Clal Insurance Enterprises Holdings Ltd bought a new stake in shares of Netflix during the second quarter worth $26,000. Pathway Financial Advisers LLC acquired a new position in Netflix in the 3rd quarter worth $26,000. Sawyer & Company Inc acquired a new position in Netflix in the 3rd quarter worth $27,000. Compound Global Advisors LLC bought a new position in Netflix during the 2nd quarter worth about $29,000. Finally, Burnham & Co LLC acquired a new stake in shares of Netflix in the 2nd quarter valued at about $29,000. 80.93% of the stock is currently owned by institutional investors and hedge funds.

Netflix Company Profile

Netflix, Inc NASDAQ: NFLX is a global entertainment company that provides subscription-based streaming services. Its platform offers a broad selection of television series, films, documentaries, stand-up specials and other programming, including content produced by Netflix and licensed from third-party studios and creators.

The company also develops and distributes original productions under the Netflix brand and has expanded into additional entertainment offerings, including mobile and cloud-based games in select markets and live programming.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.