Netflix shares ended the US trading day lower Wednesday. However, while the FANG stock member may be considered by some, to be the most vulnerable of the group, analysts remain generally positive on the stock - and with good reason.
Netflix shares closed 0.8% lower at $186.24 Wednesday. And, although the stock remains below its peak of $202.68 achieved in mid-October, there is a broadly held view that upside for the stock remains.
One reason behind the positive outlook on Netflix, is its original movie investment plans for 2018. The online streaming service said it will spend $7 - $8 billion ion content next year. That budget will include some 80 new original movies.
Putting that into context, Warner Brothers makes and shows between 17-22 movies each year.
Of course, not all Netflix movies will be big budget blockbusters, destined for international releases. But, they will include a variety of genres and critically – locally created and relevant stories for different countries and regions. And that’s something that subscribers have shown they have an appetite for.
One thing Netflix isn’t planning to invest in anytime soon, however, is live sports.
"Is that [live sports] the best use of the next billion dollars?" Netflix creative chief Ted Sarandos asked rhetorically. "We've come to the conclusion so far to date that it isn't.”
Underscoring the positive outlook based on Netflix’ current plans, here are a few analyst views on the stock.
- Stifel & Nicolaus & Co analysts, currently has a ‘buy’ rating on the stock, with a price target of $230.
- JPMorgan & Chase Co. analyst have an ‘overweight’ rating and $225 price target.
- CIBC has the Netflix stock as ‘outperform’, with a price target of $215.
And that’s not all. Institutional investment ownership of the stock is high. Some 84.25% of its shares are owned by institutional investors. The top five, according to Economics and Money are:
- Capital Research Global Investors.
- Vanguard Group Inc.
- BlackRock Inc.
- FMR LLC.
- State Street Corp.
So, whether or not you consider Netflix shares to be the weakest of the FANGs, there’s still a lot to be happy about.