Despite reporting subscriber growth that was significantly higher than analysts' average estimate, shares of Netflix (NASDAQ:NFLX) have tumbled since the company's second-quarter update earlier this month, falling about 8%.

Could this be a buying opportunity for investors? According to a handful of analysts covering the stock, it's a good time to get in on this growth story. In fact, five analysts have increased their 12-month price targets for the stock to $600 or greater following the company's second-quarter report.

A bar chart with an arrow highlighting a growth trend

Image source: Getty Images.

Accelerated growth

While Netflix stock has pulled back in recent days, it's worth noting that shares are up 50% year to date. Investors have been largely impressed by the company's accelerated momentum during the coronavirus pandemic.

In the first quarter, the company added a record 15.8 million new paid members, obliterating analysts' estimates for 7 million new members during the quarter. Strength was driven by new-customer acquisition and reduced member churn as consumers sheltered at home and spent more time streaming TV. The company's robust library of on-demand entertainment proved to be a significant draw for subscriber growth.

Momentum continued into Q2, although at a decelerated rate. Netflix added 10.1 million new subscribers during the quarter, well above analysts' average forecast for 8.3 million new members. 

The company added a total of 26 million paid subscribers in the first half of the year, compared to 12 million new members during the first half of 2019, an increase that reflects accelerated growth amid the COVID-19 crisis.

The path to $600

Following Netflix's second-quarter update, most analysts believed shares were worth more than their previous estimates.

Here's a look at five analysts who boosted their 12-month price targets for the growth stock to $600 or greater.

  • Monness Crespi analyst Brian White raised his price target from $500 to $600, reiterating a buy rating for the stock
  • Morgan Stanley analyst Benjamin Swinburne kept an overweight rating and increased his price target from $575 to $600
  • Loop Capital analyst Alan Gould reiterated a buy rating and boosted his target from $500 to $600
  • RBC Capital analyst Mark Mahaney maintained an outperform rating and raised his target from $500 to $610
  • JPMorgan analyst Doug Anmuth reiterated an overweight rating and increased his price target from $535 to $625

While the reasons for these analysts' optimistic outlooks vary, some expected drivers for the stock are worth highlighting: a strong content slate in Q3, the scalability of Netflix's business model, the depth of the company's content library, and reduced member churn (on a year-over-year basis) even as member growth spikes.

Of course, it's impossible to know where Netflix stock will be trading one year from now. But shares of the streaming-TV company are looking more compelling after their recent pullback.