The battle over streaming content is still taking its toll on some...
Shares of Netflix Inc. sank again Tuesday, enough to turn negative for this year, after the previously most-bullish analyst slashed his price target to below the Wall Street average, citing expectations that the path to profitability will take longer than expected.
Analyst Jeff Wlodarczak at Pivotal Research affirmed the buy rating he’s had on Netflix for at least the past three years, but lowered his price target by 32% to $350. His target was still 38% above current levels, but was now 11% below the average price target of $393.26, of the 40 analysts surveyed by FactSet.
“Against this backdrop of accelerating industry spend we believe the right move for [Netflix] management is to also materially accelerate their spend,” Wlodarczak wrote, which he believes is needed to maintain its “sizeable content lead” on its peers, increase barriers to entry, reduce churn and maintain growth in subscribers and average revenue per user . He said, however, that increased spending could temporary pressure margins and free cash flow.
He also cut his 2019 earnings-per-share estimate to $3.64 from $3.93 and lowered his sales outlook to $20.18 billion from $20.20 billion. Trendline break ends 3-year uptrend Netflix’s stock has fallen below a trendline on the weekly charts, that has defined the trajectory of the current uptrend going back to September 2016.
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