Why Stifel Downgraded Netflix Stock
Netflix stock downgraded to “hold”
Analyst Scott Devitt of Stifel Nicolaus recently downgraded Netflix (NFLX) stock to a “hold” from a “buy.” In a note to clients cited by Barron’s, Devitt wrote that Netflix stock “may have sprinted ahead of fundamentals in the short-term.” At the time Devitt was issuing the downgrade note, Netflix stock had gained more than 67% since the beginning of the year and 127% in the trailing 12 months.
Netflix stock rose more than 55% in 2017, while Amazon (AMZN) stock jumped about 56% in that year. The stock of Google parent Alphabet (GOOGL) and Comcast (CMCSA) gained about 33% and 16%, respectively, in 2017. Time Warner (TWX) stock declined about 5.2% in 2017.
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Netflix’s price target raised
Despite downgrading the stock, Devitt said that Netflix’s business and competitive positions are attractive. As a result, Devitt raised his price target on Netflix to $325 from $283. Netflix was also downgraded to “neutral” from “buy” by Buckingham Research in January. But Buckingham also raised its price target on the stock to $257 from $251.
Wall Street is bullish on Netflix
Overall, Wall Street is bullish on Netflix. The stock has an average rating of “buy” and an average price target of $266.39. Netflix’s rising subscriber base and its room to raise service prices as it adds more original content are some of the factors behind Wall Street’s optimism about the stock.
Pivotal Research, which has the highest price target on Netflix, at $400, predicts strong subscriber growth for Netflix in the overseas markets. Netflix closed 4Q17 with 57.8 million paying international subscribers.