© Stocksak. Netflix (NFLX) Stock a ‘Relatively Attractive Tech Play’ – Pivotal Research
By Sam Boughedda
Netflix’s (NASDAQ.) rating was twice upgraded to Buy from Seller and its price target increased to a Street high at $375 from $200 by Pivotal Research Wednesday. This is the eighth upgrade to the stock since September 7, 2022.
Pivotal Research analysts called Netflix a “relatively desirable tech play” and listed several reasons why the upgrade was necessary.
They stated that the first reason was an “increase of our admittedly conservative 2023 Net New Subscriber Forecasts from 5.5M – 15M (vs. consensus 12.5M), driven primarily by what they believe will be success in converting a substantial number of effective pirates to paying subscribers or higher ARPU, and to a lesser degree the short term subscriber benefits launching an Ad Supported Service.”
They blamed the firm’s “substantial” price increase on Netflix’s 2023-based subscription/ARPU forecasts, and a “move towards YE 23 target from YE 22 previously.” In addition, the analysts remarked that while they remain concerned about consumer churn down to $7 ad-supported packages — particularly in a recession — it is unlikely to develop into a potential issue until the second half of 2023 at the earliest.
The analysts added that NFLX stock seems to be a very attractive investment option amidst major slowdowns of digital advertising. NFLX should be capable to lever pirate conversion, and ad supported to grow in virtually all environments. “Despite the competition heating up, NFLX still offers the most powerful streaming experience worldwide with a reasonable path for accelerating subscriber growth over the next year.”
The analysts stated that they still believe that Reed Hastings, the Netflix CEO, will try to sell the company as soon as 2024.