By: Gene Marcial
Netflix, one of the heavyweights among the large momentum stocks that have gotten hammered during the market’s pullback, tumbled on Monday about 2%, to $141 a share, as investors gasped at the video-streaming leader’s weaker-than-expected subscriber numbers in the first quarter. And the stock has continued to sag, closing at $139 by Wednesday, from its 52-week high of $148.
The company’s first-quarter results showed a mixed picture that caught many investors by surprise. A number of unhappy large shareholders bailed, amid the consternation over the disappointing quarterly performance.
So should investors turn their back on shares of Netflix, the world’s largest subscription service for accessing TV shows and movies? That could prove to be a huge mistake, argue the bulls and several analysts who track the stock. .
Opportunity knocks, they assert, as the fiery and fast-rising stock pulls back and takes a breather. They remain optimistic in spite of the burst of selling in the stock.
One of them is Tuna Amobi, equity analyst at CFRA Market Advisor, who raised his price target for Netflix by $5 a share to $160. Agt the same time, he boosted his 2017 earnings estimate for Netflix by 18 cents a share, to $1.10, and raised his 2018 forecast by 6 cents, to $1.90. The increase in his estimates, says Amobi, is “partly warranted by the international upside and secular growth story.”
He notes that revenues jumped 35% on global net subscriber additions of 4.95 million (1.42 million in the U.S. and 3.53 million internationally) which, however, was below the company’s guidance. But Amobi points out that the target for the second quarter of 3.2 million addition “implies a year-to-year reaccelerating, if also somewhat cautious.