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Netflix Stock Gets a Round of Price Target Boosts After Earnings Beat

Analysts respond to Netflix's third-quarter earnings and fourth-quarter slate.

Wall Street's analysts on Wednesday were lining up to lift their share-price targets for Netflix  (NFLX) - Get Netflix, Inc. (NFLX) Report after the streaming giant beat Wall Street's third-quarter earnings expectations.

Shares of the Los Gatos, Calif., company at last check were down nearly 2% to $626.74.

On Tuesday Netflix posted better-than-expected third-quarter earnings and said it added 4.4 million subscribers to its streaming service. That's thanks in part to hit shows such as "Money Heist," "Squid Game" and "Sex Education."

KeyBanc analyst Justin Patterson, who raised his price target on Netflix to $690, cited the company's third quarter, saying it reflected "solid" performance from returning and new originals.

Patterson, who kept his overweight rating on the shares, said the company's fourth-quarter guidance of 8.5 million is slightly above consensus. 

Given momentum entering the quarter and Netflix's unprecedented fourth-quarter slate, the analyst said the bias to estimates is upward, particularly as Asia-Pacific ramps.

JPMorgan analyst Doug Anmuth also noted the company's third-quarter results and fourth-quarter guidance as he raised price target on Netflix to $750 from $705 and reiterated his overweight rating on the shares. 

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The results and guidance reflect the benefits of stronger content and greater distance from the pandemic, Anmuth said. Another factor: the ongoing secular shift from linear TV to on-demand streaming. He also said he was "encouraged by the strong" fourth-quarter content slate.

Deutsche Bank analyst Bryan Kraft was more bearish, downgrading Netflix to hold from buy while keeping his $590 price target.

The analyst said that while he shares the market's enthusiasm toward Netflix's fourth-quarter content slate and the optionality it brings to fourth-quarter net subscriber additions, he says a fourth-quarter subscriber beat is already more than priced into the stock.

Credit Suisse analyst Douglas Mitchelson said subscriber growth and margin guidance for the fourth quarter could prove conservative.

He said evidence supported a 2022 return to "normal" as management indicated they felt the service is through the pandemic pull-forward, competition so far is not having a noticeable impact, content is driving a rebound in growth post-pandemic, and management says the service still has pricing power. 

Estimates for 2022 are not moving higher on the back of third-quarter results, Mitchelson said, and nor should Netflix's stock as a result. But the next six weeks of content releases suggest numerous opportunities for more viral hits that could finally move 2022 expectations above Wall Street estimates.

Mitchelson has an outperform rating and a price target of $740 on the shares.