Shares of Netflix Inc. rose Wednesday, after they garnered another $500 price target from a Wall Street analyst, with Oppenheimer’s Jason Helfstein now more bullish on the streaming video giant’s growth outlook as it phases out the lowest-priced ad-free subscription tier.
Helfstein reiterated the outperform rating he’s had on Netflix’s stock
NFLX,
since September 2022, but raised his price target to $500 from $450. The new price target implied about 20% upside from Tuesday’s closing price of $417.08.
Of the 44 analysts surveyed by FactSet, Helfstein is now tied with Cowen & Co.’s John Blackledge, Guggenheim Securities’ Michael Morris and Wells Fargo’s Steven Cahall for the second-highest price targets on Netflix’s stock.
The Street’s most bullish analyst was Jeffrey Wlodarczak at Pivotal Research Group, with a $535 stock price target.
Netflix’s stock rose 1.5% in premarket trading. The stock pulled back 6.3% over the past seven sessions, after closing June 15 at a 17-month high of $445.27.
Oppenheimer’s Helfstein said he’s now more bullish as he believes the potential discontinuation of Netflix’s lowest-priced ad-free plan, which is being tested in Canada, would boost revenue per subscriber, and unlock about $4.4 billion in annual revenue.
“While we expect a gradual rollout by geography into next year, we think investors can start to discount the additional revenue today,” Helfstein wrote in a note to clients.
He also believes an extended strike by Hollywood writers, which is nearing the two-month mark, should help drive subscribers to Netflix, given the company’s deep backlog of shows that are unaffected by the strike.
Read: Here’s what’s new on Netflix in July 2023 — and what’s leaving.
Netflix’s shares of the TV viewership market continued to grow, as Helfstein said it reached 2.6% so far this quarter, up from 2.5% in the previous quarter and from 2.3% in the same period a year ago.
While he acknowledged that valuations of Netflix’s stock are at the high end of its peer group, Helfstein believed that premium valuation is warranted for “the leading global digital media company with a multi-year growth runway.”
Read: Opinion: As the original Netflix dies, a new era of ads and password crackdowns is born.
FactSet
Helfstein was of 22 analysts, of the 44 surveyed by FactSet, who were bullish on Netflix, while 19 were neutral and 3 were bearish. The average stock price target of $396.71 implied about 5% downside from Tuesday’s closing price.
Netflix’s stock has soared 41.4% year to date through Tuesday, while the S&P 500 index
SPX,
has gained 14.0%.
This post was originally published on Market Watch
