Netflix stock trades in the red today despite Buy rating and $125 target price from Cantor Fitzgerald
Yesterday, Cantor Fitzgerald has published a report on Netflix Inc. stock, reiterating its Buy rating and bullish price objective of $125. The streaming giant’s stock dropped in spite of the recurrence of trust.
Last night, the 67th Emmy Awards ended with Netflix getting Emmy awards, whereas it gets 7 precious years, the analysts said that this is a great performance for a streaming service that is still in its early stages. The analysts also said that Amazon and Netflix altogether was nominated in 46 awards, specifying their strength in the streaming service sector.
The analysts also added that there are several positive points, which points out the company prospects. These include the robust viewpoints of latest original, Narcos, the continuing expansion in Asia, and the increase in price in Europe.
The latest launched series, which was made available last month, got robust ratings on both IMDB and Metacritics, rated 9.1 and 9.2 respectively. The analysts believe that this is the good sign for the users growth as in the past, an optimistic correlation between originals and increase in subscribers has prevailed.
Netflix Inc. has declared plans to launch its services in over 200 countries by the end of next year. The introduction in Japan took place during the start of the year, whereas that in Taiwan, Hong Kong, South Korea and Singapore is most likely take place in early 2016. The expert thinks that these launches of services will help the company to sustain its subscription growth for the coming two to three years.
The service subscription fee was increase by 1 euro in Germany, Netherlands and France to 8.99 euro. According to analysts this increase specifies the company’s strength and robust adoption in the region.
The price target of $125 is calculated on the basis of 7 year discounted model of cash flow, assuming weighted average cost of capital (WACC) of 10% and 4% of terminal growth. Netflix stock now trades at multiples of 78.7x and 6.5x for projected EBITDA and revenues of fiscal year 2015, and multiples of 79.3x and 5x for FY16, respectively.
The threats to the price target include slowing in subscription growth, competitive pressure, global losses, faster deterioration of DVD division, and failure in recommencing content contracts with suitable terms.
The Street is bullish regarding the stock, with 23 analysts giving it a Buy, 16 suggesting a Hold and 6 giving it a Sell rating.
Netflix stock news shows that the stock was down 1.82% to 98.7 at market close yesterday.