Netflix (NASDAQ:NFLX) Shares Up 4.7% – Should You Buy?

Netflix, Inc. (NASDAQ:NFLX) rose 4.7% during mid-day trading on Wednesday. The company traded as high as $66.78 and last traded at $66.39. Approximately 49,502,511 shares traded hands during mid-day trading, an increase of 16% from the average session volume of 42,782,328 shares. The stock had previously closed at $63.42.

Netflix News Roundup

Here are the key news stories impacting Netflix this week:

• Positive Sentiment: An investor-focused article points to record profits, nearly $5 billion in share buybacks, and deals with Disney and the NFL as evidence of Netflix’s expanding business and capital returns. Those strengths contrast with the shares’ recent weakness, though the article does not cite a fresh earnings announcement. Netflix Is Playing a Bigger Game. Investors Should Take Notice
• Positive Sentiment: Netflix hired former Google executive Darshan Kantak as vice president of its ads platform. His adtech experience could help the company develop advertising into a stronger source of revenue, although the report gives no new financial targets. Netflix just hired an adtech operator who knows how to solve ‘gnarly problems’
• Neutral Sentiment: Netflix is testing an “AI Discover” tab with recommendations based on viewers’ moods. Better discovery could support engagement and retention, but it is an early experiment with no demonstrated impact on subscribers or revenue yet. Netflix’s new AI Discover tab helps you find something to watch based on your mood
• Negative Sentiment: A valuation analysis says Netflix shares have fallen sharply from their peak amid slower revenue growth and uninspiring guidance. While the article notes the stock trades below 17 times next year’s earnings, the growth concerns help explain why investors may be cautious despite the lower valuation. Netflix Trades at a Discount to the S&P 500’s Valuation. Is It Deserved?

Analysts Set New Price Targets

Several equities research analysts have issued reports on the stock. Daiwa Securities Group lowered their price target on shares of Netflix from $102.00 to $76.00 and set an “outperform” rating on the stock in a research note on Wednesday, July 22nd. Rothschild & Co Redburn reduced their price objective on shares of Netflix from $120.00 to $93.00 and set a “buy” rating for the company in a research note on Tuesday, July 21st. Rosenblatt Securities set a $71.00 price objective on Netflix and gave the company a “neutral” rating in a report on Wednesday, October 21st. Stephens assumed coverage on Netflix in a research report on Friday, July 17th. They issued an “overweight” rating on the stock. Finally, Pivotal Research reissued a “hold” rating and set a $65.00 price target (down from $70.00) on shares of Netflix in a research report on Wednesday, October 21st. Two investment analysts have rated the stock with a Strong Buy rating, thirty-five have assigned a Buy rating, seventeen have issued a Hold rating and two have issued a Sell rating to the company’s stock. According to data from MarketBeat, Netflix presently has a consensus rating of “Moderate Buy” and a consensus target price of $89.14.

Netflix Trading Up 4.7%

The stock has a market cap of $272.66 billion, a price-to-earnings ratio of 19.19, a PEG ratio of 0.91 and a beta of 1.62. The business’s 50 day simple moving average is $72.00 and its 200 day simple moving average is $81.31. The company has a quick ratio of 1.07, a current ratio of 1.07 and a debt-to-equity ratio of 0.43.

Netflix (NASDAQ:NFLX) last issued its earnings results on Tuesday, October 20th. The Internet television network reported $0.87 earnings per share (EPS) for the quarter, beating analysts’ consensus estimates of $0.82 by $0.05. Netflix had a net margin of 29.69% and a return on equity of 42.69%. The company had revenue of $12.87 billion for the quarter, compared to analysts’ expectations of $12.87 billion. During the same period in the prior year, the firm earned $0.59 EPS. Netflix’s quarterly revenue was up 11.9% compared to the same quarter last year. On average, research analysts expect that Netflix, Inc. will post 3.59 EPS for the current fiscal year.

Insiders Place Their Bets

In other news, Director Richard Barton sold 720 shares of the firm’s stock in a transaction that occurred on Thursday, September 10th. The stock was sold at an average price of $75.27, for a total value of $54,194.40. Following the completion of the sale, the director directly owned 2,460 shares of the company’s stock, valued at $185,164.20. This trade represents a 22.64% decrease in their ownership of the stock. The transaction was disclosed in a filing with the SEC, which is available at this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CFO Spencer Neumann sold 9,248 shares of the firm’s stock in a transaction that occurred on Monday, August 10th. The shares were sold at an average price of $75.79, for a total value of $700,905.92. Following the completion of the sale, the chief financial officer directly owned 73,787 shares of the company’s stock, valued at approximately $5,592,316.73. The trade was a 11.14% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. Insiders have sold 55,980 shares of company stock worth $3,970,756 over the last ninety days. 1.24% of the stock is currently owned by corporate insiders.

Hedge Funds Weigh In On Netflix

A number of hedge funds and other institutional investors have recently added to or reduced their stakes in NFLX. AEGON ASSET MANAGEMENT UK Plc boosted its stake in shares of Netflix by 25.9% during the 3rd quarter. AEGON ASSET MANAGEMENT UK Plc now owns 744,983 shares of the Internet television network’s stock valued at $51,836,000 after purchasing an additional 153,343 shares in the last quarter. Texas Bank & Trust Co lifted its holdings in Netflix by 3.5% in the third quarter. Texas Bank & Trust Co now owns 14,840 shares of the Internet television network’s stock worth $1,033,000 after buying an additional 495 shares during the period. Gryphon Financial Partners LLC boosted its position in Netflix by 3.5% during the 3rd quarter. Gryphon Financial Partners LLC now owns 35,803 shares of the Internet television network’s stock valued at $2,491,000 after acquiring an additional 1,203 shares in the last quarter. Vestor Capital LLC grew its holdings in shares of Netflix by 19.1% during the 3rd quarter. Vestor Capital LLC now owns 1,072 shares of the Internet television network’s stock worth $75,000 after acquiring an additional 172 shares during the period. Finally, Retirement Systems of Alabama grew its holdings in shares of Netflix by 20.0% during the 3rd quarter. Retirement Systems of Alabama now owns 1,933,969 shares of the Internet television network’s stock worth $134,566,000 after acquiring an additional 322,558 shares during the period. 80.93% of the stock is owned by institutional investors.

Netflix Company Profile

Netflix, Inc (NASDAQ:NFLX) is a global entertainment company that provides subscription-based streaming services. Its platform offers a broad selection of television series, films, documentaries, stand-up specials and other programming, including content produced by Netflix and licensed from third-party studios and creators.

The company also develops and distributes original productions under the Netflix brand and has expanded into additional entertainment offerings, including mobile and cloud-based games in select markets and live programming.