Imperial Capital analyst David Miller has cut his rating on the stock of streaming giant Netflix from “outperform” to “neutral,” while maintaining his price target of $489.
In a Monday report, he cited the stock’s run-up this year. “Thus far, for 2020, Netflix’s shares have risen 50.2 percent, versus the S&P 500, which is down 3.3 percent,” the analyst highlighted. “In the last 18 months, shares of Netflix are up 81.6 percent, versus the S&P 500, which is up 26.1 percent.”
Netflix shares had closed last week at $476.89, “a mere 2.5 percent discount to our price target,” Miller concluded. “We see no reason to increase the target price at this time.”
In Monday trading, after the analyst’s report was published, Netflix’s stock hit an all-time high of $499.50. As of 11:25 a.m. ET, it was up more than 4.5 percent at $498.71, giving the company a market value of nearly $219 billion.
Miller cited four reasons for the outperformance. First, “this is one of a very few names in the S&P 500 which, for the most part, is impervious to any economic effects of COVID-19, as the price points for each service iteration are mostly recession-resistant and consumption of content is not communal,” he said, estimating that “an incremental $184 per share of equity value has been created simply due to the advent of COVID-19,” which allowed the stock to go this high faster than it would have done otherwise.
In addition, Netflix “has no exposure to any assets in the media sector under secular threat, such as cable networks, nor assets directly affected by COVID-19, such as theme parks or movie theaters,” Miller highlighted.
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Written By: Tommy Lightfoot Garrett
Photographs are Courtesy: AP
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