© Reuters. Goldman pushes Netflix target to $490, sees positive cash flow By 2022
- Netflix (NASDAQ:) rallied 4.4% to a new all-time high in today's trade after Goldman Sachs (NYSE:) reiterated its Buy rating and raised its stock price target to a new Street-high $490 from its earlier $390 target; shares today closed just short of $380.
- Goldman's Heath Terry thinks 2018 will mark the negative cash flow peak for NFLX and expects shares to benefit as cash flow inflects positively in the coming years.
- NFLX's cash burn totaled $2.02B in 2017 and should worsen to $3.06B in 2018 before improving to $2.12B in 2019 and $1.45B in 2020 and finally turning positive as the company's multiyear investment in content generates $500M in positive cash flow, Terry says.
- NFLX's revenue growth - up 32.4% last year to $11.69B - is beginning to outpace content spending growth, Terry argues, believing "the growing content offering and expanding distribution ecosystem will continue to drive subscriber growth above consensus expectations."
- Now read: Netflix: 3 Reasons You Should Be Worried About This Stock