The sudden drop of new subscribers of Netflix Incorporated (NFLX.O) blindsided analysts that led them to slash their target prices as it shed almost a fifth of the company’s overall value last Thursday.
Unfortunately, the advice came a little too late for the company’s investors, which followed recent “buy” guidance released by 20 brokerages at the minimum, like BTIG Research that opted to upgrade the said stock two days before the company reported its third-quarter results this year.
BTIG Research has set a price target amounting to $600 for one year on stock being traded last Thursday afternoon amounting to $362.45 which is 19% lower. BTIG stated that their Oct. 13 upgrade was poorly timed.
BTIG is trusting expected long-term effects of Netflix’s expensive push into more original content and targeting more international markets. BTIG’s note last Thursday was entitled, “Roger Roger: Why Selling Netflix Now Is A Mistake.”
With their original shows including “Orange is the New Black” and “House of Cards”, Netflix is planning to spend an additional $8.9 B to acquire new content for the follow years.
Netflix is also considering international expansion since a fourth of the company’s 53 M total customers are outside the US. This is to further reach new clients and also increase Netflix’s buying power with content providers.
The report of BTIG is not alone when it comes to forecasting Netflix’s growth since it is currently financing a total of four movies of Adam Sandler and also in the process of making a sequel to “Crouching Tiger, Hidden Dragon.”
Cowen & Co, RBC, and Barclays in just a month, have raised their overall price targets, while Canaccord Genuity started with their “buy” rating and increased their price target to $550 last September.
But it is important to note that this was before the announcement of Netflix’s 3.02 M new streaming clients in the year’s quarter that ended this September, which is way lower than their 3.69 M forecast.
