Why Are Analysts Positive toward Netflix despite Its Q2 Miss?



Analysts’ recommendations for Netflix

Netflix (NFLX) recently posted disappointing second-quarter results, as its earnings beat expectations. Its revenues also lagged on sluggish subscriber numbers. The stock fell as much as 13.0% in pre-market trading on July 17 after the earnings release. However, it rebounded during trading hours and closed down 5.24% on July 17.

Nevertheless, Netflix is expected to continue spending on original content to attract subscribers. Of the 46 analysts covering Netflix, 28 analysts rated the stock as a “buy,” while only three analysts gave the stock a “sell” rating. Further, 15 analysts rated the stock as a “hold.”

Analysts have set a target price of $377.60 for the stock and a median consensus estimate of $389.00. Netflix is now trading at a 2.4% discount to its consensus median target estimate.

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Technical indicators for Netflix

On July 17, Netflix stock was trading at $379.48 on July 17, 11.7% above its 100-day moving average of $339.70 and 2.3% above its 50-day moving average of $370.80. However, the stock was trading 5.7% below its 20-day moving average of $402.4.

Netflix has a 14-day RSI (relative strength index) of 41. An RSI above 70 indicates an overbought stock, and an RSI below 30 indicates an oversold stock.

Netflix has an upper Bollinger Band of $426, a middle Bollinger Band of $402, and a lower Bollinger Band of $379. Bollinger Bands are a combination of the moving averages for a stock.

The stock has a positive MACD (moving average convergence divergence) of 11.52, indicating an upward trading trend for the stock. A stock’s MACD is the difference between its short-term and long-term moving averages.


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