Netflix stock price hits record high as coronavirus ups demand

By: Michael Harris
Michael Harris
Specialising in economics by academia, with a passion for financial trading, Michael Harris has been a regular contributor to… read more.
on Apr 16, 2020
  • Goldman Sachs, Morgan Stanley, and J.P. Morgan have all issued a buy rating on the Netflix stock
  • Analysts bet on a high number of new users during the coronavirus pandemic
  • Netflix stock price prints new record high near the $450 handle, eyes $470 next

Shares of Netflix (NASDAQ:NFLX) have surged to a record high this week as the streaming giant continues to receive bullish recommendations from Wall Street. 

Fundamental analysis: Everyone is bullish

Analysts from Goldman Sachs, Morgan Stanley, and J.P. Morgan have all issued a “buy” or “overweight” rating on the Netflix stock as investors continue to bet on streaming during the coronavirus pandemic. 

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“We believe the unfortunate COVID-19 situation is cementing Netflix’s global [direct-to-consumer] dominance partly driven by the incremental content spend that is enabled by their massive and growing subscriber base,” wrote Pivotal Research Group analyst Jeff Wlodarczak. 

Wlodarczak also raised the price target on Netflix’s stock to $490, around $53 higher than the closing price on Thursday. The same price target is also set by Goldman, while Morgan Stanley aims for $450. JP Morgan sees Netflix stock trading at $480 as a fair value.

“Content additions to the platform, combined with the value of Netflix’s library to those staying home during the COVID-19 crisis, drove this [expected] outperformance [in subscriber additions], more than offsetting the lingering impact of last year’s price increase and growing competition in SVOD,” Goldman Sachs analyst Heath Terry wrote in a research note to investors.

Some analysts, like Brian White from Monness, Crespi, Hardt & Co, see the increase in the number of hours spent inside homes as an opportunity to introduce new users to its service.

“Even after this crisis is over, the thought of returning to a packed theater to watch a new movie release is an experience that most people are likely to avoid for the foreseeable future,” says Brian White from Monness, Crespi, Hardt & Co.

The streaming giant is scheduled to report its first-quarter results on next Tuesday. Surveyed analysts are expecting earnings of $1.61 a share for the period, on revenue of $5.73 billion.

Technical analysis: The march higher continues

Shares of Netflix have gained more than 50% in the past few weeks, easily surpassing the previous record high of $423.21, set in 2018. The price action has also cleared an important resistance near the $425 handle. 

Netflix stock weekly chart (TradingView)

A weekly close above this level opens the door for a test of the key resistance block, starting from $460 to $475 (the rectangle). This block consists of three different Fibonacci extensions and it represents a major target for the buyers. 

On the downside, any pullback towards the $385 – $395 support is likely to be bought. 

Summary

Shares of Netflix have gained around 50% in the past few weeks, hitting the new record high near the $450 handle. Analysts from Goldman Sachs, Morgan Stanley, and J.P. Morgan have all issued a “buy” or “overweight” rating on the Netflix stock a week before the streaming giant is due to report its Q1 earnings. 

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