Netflix’s Stock Extends Rally on Bullish Analyst Reports Ahead of Its Earnings

January 11, 2019, 9:10 PM UTC

Netflix’s stock rallied as much as 5% Friday following a pair of bullish reports from Wall Street analysts who are expecting the streaming-video giant to post strong earnings results next week.

Late Thursday, UBS analyst Eric Sheridan said in a research note that he expected Netflix to again surpass Wall Street’s consensus of subscriber growth in the fourth quarter of 2018. In the third quarter, Netflix added 7 million subscribers, well above analyst forecasts, for a total of 137 million subscribers. Sheridan raised his price target on the stock to $410 a share from $400 a share.

On Friday morning, Raymond James analyst Justin Patterson upgraded the stock to “strong buy” from “outperform,” noting Netflix’s success with its horror film “Bird Box.” Patterson, who sees Netflix “approaching a profit inflection,” wrote that “the combination of positive revisions and emerging signs of long-term profit potential will yield share price outperformance.”

Following both research reports, Netflix shares rose as high as $341.08 a share during Friday trading, or 5% above its closing price on Thursday.

Netflix is expected to report earnings next Thursday, Jan 17. The company’s financial report is typically closely watched for a couple of reasons. It’s usually the first big tech name to appear during the quarterly earnings parade. And it’s one of the notable FAANG stocks, which have been especially volatile in recent months.

Among the five FAANG stocks—which also include Facebook, Apple, Amazon, and Alphabet/Google—Netflix has been the star performer during the past three trading weeks since U.S. stocks bottomed out. Ever since Christmas Eve, when stock indexes sunk to a 14-month low, Netflix’s stock has risen more than 45%.

Not all analysts are bullish on Netflix, which often sees its stock trade volatilely in the wake of quarterly earnings reports. Morgan Stanley cut its price target on the stock to $430 a share from $475 a share, citing rising competitive pressure. And Citron Research said the stock’s recent rally has left it overvalued. Citron sees Netflix’s stock falling back to $300 a share.