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Why Netflix Stock Jumped Yet Again Today

By Evan Niu, CFA – Apr 16, 2020 at 2:12PM

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The video-streaming pioneer has been getting bullish upgrades from Wall Street all week.

What happened

Shares of Netflix (NFLX 0.71%) have jumped again today, up by 4% as of 12:30 p.m. EDT, after the company continued to receive bullish upgrades from Wall Street. Analysts have been releasing positive research notes on the dominant video streamer all week long.

So what

Goldman Sachs, Morgan Stanley, and J.P. Morgan all reiterated buy or overweight ratings today while increasing price targets. Morgan Stanley boosted its target from $400 to $450, JPMorgan went from $410 to $480, and Goldman ratcheted up its estimate from $430 to $490. That last target matches the Street high that Pivotal assigned to Netflix shares yesterday. Evercore increased its target from $300 to $350.

Exterior shot of Netflix office in Los Angeles

Image source: Netflix.

"Content additions to the platform, combined with the value of Netflix's library to those staying home during the COVID-19 crisis, drove this [expected] outperformance [in subscriber additions], more than offsetting the lingering impact of last year's price increase and growing competition in SVOD," Goldman Sachs analyst Heath Terry wrote in a research note to investors.

Morgan Stanley analyst Benjamin Swinburne likes that Netflix doesn't have an advertising business, as ad budgets are getting hurt by the coronavirus outbreak. J.P. Morgan analyst Doug Anmuth named Netflix one of his top internet stock picks right now, citing multiple other data points that suggest the shift to streaming is accelerating.

Now what

Countering the bulls, Wedbush's Michael Pachter was the lone analyst issuing a bearish note today. Pachter reiterated an underperform rating while adjusting his price target from $173 to $194, as he expects Netflix's "substantial cash burn" will continue for the foreseeable future. The virus is also disrupting content production across the board, and a lack of new shows and movies could result in higher subscriber churn later this year.

Evan Niu, CFA owns shares of Netflix. The Motley Fool owns shares of and recommends Netflix. The Motley Fool has a disclosure policy.

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