There is a significant buying opportunity in Netflix, according to Deutsche Bank. Analyst Bryan Kraft upgraded the streaming giant to a “buy” from a “hold.” Although he lowered his price target to $95 from $100, this still implies an upside of 37% from Monday’s close.
Netflix shares have declined more than 14% in September, putting the stock on track for its worst monthly performance since June, when it plunged 17%. The stock is also down more than 26% for the year, on track for its biggest annual decline since 2022. Concerns around user engagement have weighed on the stock, with Wells Fargo earlier this month lowering its rating on Netflix to underweight, noting that trends in this area are worrisome.
However, Deutsche Bank’s Kraft believes investors are missing the bigger picture. NFLX YTD mountain NFLX year to date “Netflix has an established competitive advantage and substantial lead over competitors in international production, which is evident in Netflix’s well-diversified geographic content production mix,” he said. “We believe this advantage will allow Netflix to sustain its global leadership position. More than 60% of production is now outside of the US.”
Kraft added that Netflix “has the brand strength, global scale in subscribers/revenue, and organizational expertise to continue to broaden its position as a platform (Netflix As A Platform, NAAP), rather than limiting itself to a vertically integrated entertainment producer and programmer.”
The stock ticked higher by more than 1% following the upgrade. Most analysts covering Netflix shares are bullish. According to LSEG data, 37 of 51 rate the stock a buy or strong buy.