Analysts Respond to Netflix’s Earnings and Update Coverage

Netflix Analyst Coverage

Fundamental Analysis of Netflix

Based on the fundamental analysis provided, Netflix demonstrates several strengths and areas of concern:

Positive Fundamentals:

1. Superior Risk-Adjusted Returns: Netflix has outperformed its sector peers in terms of risk-adjusted returns, indicating strong performance relative to its industry over the past 12 months.
2. Positive Cash Flow: The company has generated positive total cash flow in the most recent four quarters, which is a positive indicator of financial health.
3. Positive Free Cash Flow: Netflix has also maintained positive total free cash flow in the same period, indicating its ability to generate cash after accounting for capital expenditures.
4. Superior Return on Assets and Return on Equity: Netflix’s management has delivered better returns on assets and equity compared to its peers, placing it in the top quartile. This suggests efficient utilization of resources and strong profitability.
5. Superior Capital Utilization: The company has demonstrated better return on invested capital compared to its peers, indicating efficient use of capital resources.
6. High Market Capitalization: Netflix is one of the largest entities in its sector, which typically indicates stability and market leadership.
7. Superior Revenue and Earnings Growth: Netflix has exhibited top-quartile revenue and earnings growth over the previous five years, demonstrating its ability to expand its business and generate profits.

Negative Fundamentals:

1. Overpricing Compared to Book Value: The stock is trading at a high price compared to its book value, suggesting it may be overvalued relative to its asset base.
2. Overpricing Compared to Earnings: Netflix’s price-to-earnings ratio is high compared to its peers and above the sector median, indicating that investors may be paying a premium for its earnings.
3. High Volatility: The stock has exhibited volatile total returns over the past five years, which may indicate higher risk. Investors should have a high risk tolerance when considering investing in such a volatile stock.
4. Overpricing on Cash Flow and Free Cash Flow Basis: Netflix is trading at high prices compared to its peers on both a price-to-cash-flow and price-to-free-cash-flow basis, suggesting that it may be overvalued relative to its cash generation.

NFLX Stock Forecast

1. Analyst Target Price and Rating:
   • The average analyst target price for Netflix Inc over the next 12 months is USD 587.99, based on forecasts from 33 analysts. This indicates an expectation for potential upside in the stock price.
   • The average analyst rating for Netflix Inc is Buy, suggesting overall positive sentiment among analysts regarding the stock’s prospects.
2. Stock Target Advisor Analysis:
   • Stock Target Advisor’s own analysis of Netflix Inc is Slightly Bullish. This assessment is based on 9 positive signals and 5 negative signals, indicating a slightly favorable outlook overall.
3. Current Stock Performance:
   • At the last closing, Netflix Inc’s stock price was USD 610.56.
   • Over the past week, Netflix Inc’s stock price has decreased by -2.90%, reflecting short-term downward movement.
   • Over the past month, the stock price has decreased by -1.27%, indicating some recent volatility or consolidation.
   • However, over the last year, Netflix Inc’s stock price has increased significantly by +82.97%, demonstrating strong long-term performance and potential for growth.

In summary, while the average analyst target price suggests potential upside for Netflix Inc’s stock over the next 12 months and the average analyst rating is Buy, investors should consider the recent short-term downward movement in the stock price alongside its strong long-term performance. The slightly bullish analysis from Stock Target Advisor also indicates cautious optimism regarding Netflix’s prospects. As with any investment decision, investors should conduct thorough research and consider their own risk tolerance before making decisions.

STA Research

STA Research (StockTargetAdvisor.com) is a independent Investment Research company that specializes in stock forecasting and analysis with integrated AI, based on our platform stocktargetadvisor.com, EST 2007.