Seaport upgrades Netflix to purchase forward of earnings report

Seaport Research Partners joined the bull camp on Netflix forward of the corporate’s earnings report subsequent week.

Analyst David Joyce upgraded shares of the streaming large to purchase from impartial. Joyce’s $955 value goal implies 12.6% upside over the place the inventory completed Wednesday’s session.

“NFLX ought to stay a core holding on account of top-line development, [operating income] margin growth, and [free cash flow] conversion,” Joyce wrote in a Wednesday notice to purchasers.

Netflix is about to publish earnings Tuesday after the bell. Joyce famous shares have retreated main as much as the report, with shares down almost 5% within the new buying and selling yr.

Part of Joyce’s optimism stems from his enhance in anticipated internet member additions. Seaport now estimates Netflix gained 9 million subscribers on stability, up from a earlier forecast of 5.7 million.

Netflix additionally has operational tailwinds tied to robust content material that may justify the inventory’s “premium” valuation, Joyce stated. For instance, he pointed to the brand new season of the TV present “Squid Game.” On prime of that, he famous the corporate’s work in streaming particular occasions and up to date displaying on the Golden Globes as additional purpose to see this valuation as earned.

“We … acknowledge that the market had examined the elevated a number of prepared to be utilized to this top-line and margin-expanding enterprise mannequin,” Joyce stated.

Netflix’s success with occasions just like the Jake Paul-Mike Tyson battle and Christmas Day NFL video games also can bolster the streamer in media rights conversations going ahead, the analyst stated.

With the improve, Joyce joined the bulk on Wall Street analysts with buy-equivalent scores, per LSEG. Netflix shares about 1.5% in Thursday’s premarket buying and selling.