Deutsche Bank downgrades Netflix, but many others raise targets

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Deutsche Bank (NYSE:DB) downgraded Netflix Inc (NASDAQ:NFLX) from ‘buy’ to ‘hold’ after the video streaming giant’s results this week, though many other banks and brokers hiked their share price targets.

It comes as Netflix’s third-quarter headline numbers beat forecasts but profit margin guidance for the fourth quarter (Q4) was much weaker because of a strong backlog of video content.

“While, on the one hand, we share the market’s enthusiasm toward Netflix’s very strong Q4 content slate and the [the opportunity to outperform expectations in Q4]; on the other hand, we think a Q4 subscriber beat is already more than priced into the stock,” Deutsche said in a note to clients.

Deutsche maintained its US$590 price target, which is 8% below the US$$625.14 close on 20 October.

Meanwhile, 19 other analysts surveyed by FactSet raised their stock price targets and only one lowered theirs.

Meanwhile, JP Morgan reiterated its optimistic ‘overweight’ rating and raised its price target to US$750 from US$705, saying “ho-hum” earnings after such a strong recent rally for the stock might be “healthier” over time.

The stock has soared 25% over the past three months through Thursday 21 October, setting a new all time high above US$$649.


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