Netflix shares are seen opening higher after a mid-week break for Independence Day, as Baird analysts raise their price target for the US streaming giant. The increase follows upbeat results on Netflix subscriber growth from the equity research firm’s consumer survey.
Netflix shares ended lower in the US on Tuesday ahead of the midday holiday break across the country. However, the stock is seen opening higher Thursday as it is in the green in out-of-hours activity.
Higher price target for Netflix
Analysts from Baird Equity Research raised their Netflix price target to $390 from $300. That hike follows its own survey suggesting that subscriber growth was solid during the second quarter of 2018.
Baird shared the details in a note called “13 Reasons Why Quarter Should Be Solid Again.” It surveyed 3,000 US consumers who indicated that the firm's original content proved to be a winner for the streaming giant.
“Our quarterly US subscriber survey suggests solid second quarter growth, seemingly confirming Street expectations. Our international checks also suggest another strong quarter,” Baird analyst William Power said in a note to clients.
“Survey results and Google trend analysis suggest solid results and given the long runway and increasing focus on local content, we expect continued solid results,” Power said.
Baird remains neutral on stock
Despite the upbeat outlook on subscriber growth and stock price, Baird retained its ‘neural’ outlook for the Netflix stock.
That’s due to a combination of things, including the likelihood of increased competition, further out.
“We remain concerned with the free cash flow losses, and potential for increased competition long term from Amazon, Apple and others, but expect strong subscriber growth to continue to support the shares,” Power said.
However, while Power isn’t the only analyst concerned with Netflix’ cashflow plans, the online TV giant remains committed to investing heavily in its original content as the best way of securing and retaining subscribers.