Netflix (NASDAQ:NFLX) traded 4% lower on Friday after Deutsche Bank (DE:DBKGn) warned it could miss Q2 subscriber growth expectations and UBS downgraded the stock.
Deutsche Bank analyst Bryan Kraft projects that new global subscribers will be in a range of 1 million below and 500,000 above the Wall Street estimates. The average estimate is 833,000 new subscribers in the US and 4.75 million internationally. Subscriber growth is a closely watched metric for this stock.
Recognizing that the company could still outperform, Kraft explained, “We see limited upside and even some downside to 2Q guidance/consensus. We don't see 2Q earnings as a positive catalyst for the stock; in fact, we see some near term downside risk.”
Kraft reiterated a “buy” rating with a price target $250, which is below the current value. Yet UBS simply downgraded the stock from Neutral to Buy, noting that, “It’s all priced in.” Both analysts pointed out that the stock had already more than doubled year to date.
Our analysis for NFLX shows the stock has positive momentum for the intermediate term. The short-term chart, included here, shows a significant range. If it closes above the previous cycle high of $424, we expect it to remain in an uptrend. However, if it closes below cycle low of $379, this signals that we may have made at least a intermediate-term top, increasing downside risk.
