By Senad Karaahmetovic
An Evercore ISI analyst upgraded shares of Netflix (NASDAQ:NFLX) to Outperform from In Line with a price target raised to $300 from the prior $245 per share.
The upgrade call is based on the results of the recent survey work as well as Evercore’s proprietary analysis of the company’s ad-supported and password-sharing revenue opportunities.
“We believe these opportunities, especially the ad-supported service, constitute Growth Curve Initiatives (GCIs)—catalysts that can drive a material reacceleration in revenue growth. We don’t believe these opportunities are factored into current Street estimates or into NFLX’s current valuation. Hence the upgrade,” the analyst explained in a client note.
Despite the fact that the market “severely tested” the core buy Netflix stock thesis this year, the analyst still believes the global streaming market “remains attractive.”
“Netflix is the proven market leader, its management team is highly experienced and has a strong (tho not spotless) vision & execution record, the business model has proven its operating margin leverage,” the analyst added.
The analyst also sees a “clear catalyst on the horizon” in the context of the new ad-tier that should help NFLX generate “substantial FCF.”
Finally, Evercore ISI analysts see an “intrinsically attractive” valuation.
Netflix shares are up 2.5% in premarket Thursday.