Netflix (ticker: NFLX) has recently experienced a “modest pullback” in its stock following its second-quarter earnings announcement. While the shares fell 8.4% on Thursday and an additional 2.3% on Friday, analysts at Baird view this as an attractive opportunity for investors to enter the market.
As a result of their analysis, Baird analysts have upgraded Netflix’s stock rating from Neutral to Outperform. They believe that Netflix has the potential to reach $500 per share, implying a 17% upside from Friday’s closing price.
According to Vikram Kesavabhotla, an analyst at Baird, Netflix is about to enter “a period of particular strength.” He predicts significant revenue acceleration in the fourth quarter of 2023 and throughout 2024, driven by the benefits of its paid sharing plan and advertising models.
Kesavabhotla also highlights Netflix’s competitive advantages in the near-term. The company’s extensive library and international exposure position it well to navigate any disruption caused by potential writers’ and actors’ strikes.
Despite the rich valuation, Baird analysts believe that it is justified given the underlying momentum and unique qualities of Netflix’s business.
In 2023, Netflix stock has already risen by an impressive 45%. However, Wall Street remains divided on whether the stock can continue its upward trajectory. Analysts who cover the stock have an average price target of $458.74, suggesting an 8.5% upside from Monday’s price. Among the analysts, 52% rate the shares as Buy, while 41% have a Hold rating.