Netflix (NFLX) - Get Netflix, Inc. (NFLX) Report and Uber (UBER) - Get Uber Technologies, Inc. Report were added to Evercore ISI's Tactical Outperform List, while social-media giant Facebook (FB) - Get Facebook, Inc. Class A Report was put on the investment firm's underperform list.
Analyst Mark Mahaney said Netflix and Uber were some of the "least risky Net stocks" in terms of consensus estimates heading into the quarter, according to the Fly.
Mahaney reiterated his outperform rating on Uber with a $70 price target. Entry into the leading ride-share company and fastest growing online food delivery company "will provide meaningful upside" through the end of 2021 and into 2022, Mahaney said in a research note. He said he viewed the San Francisco company's valuation setup as "very attractive" at current share levels.
Mahaney, who affirmed an outperform rating on Netflix with a $695 price target, said he expected content strength into the fourth quarter with a "muted" competitive slate.
The analyst also said he expected Netflix's content strength to continue into 2022. He added that the recent price increases in Europe could partly mitigate pressure on average revenue per user.
Netflix Says Squid Game Has Best-Ever Debut; Analysts Raise Target Price of Stock
Netflix said this week that "Squid Game," a hyperviolent dystopian survival drama made by producers in Korea, has had the company's most successful debut. 'Squid Game' has drawn 111 million viewers over its first month, Netflix said, passing the previous record of 82 million set by the U.K.-made Regency-era drama Bridgerton.
"The strong second half content slate – highlighted by Squid Game – has reinvigorated the stock and near-term subscriber optimism," said BMO Capital Markets analyst Daniel Salmon ahead of next week's third-quarter earnings. "We think risk/reward tilts to the upside still, but we are moving the stock a notch down our pecking order (of FAANG stocks) owing to stock price performance."
Netflix has garnered price target increases from several analysts, who are impressed with the streaming company’s fundamentals as it heads towards next Tuesday's earnings report.
Jefferies analyst Andrew Uerkwitz raised his target price to $737 from $620 and kept his buy rating. Netflix’s recent purchase of the game developer Night School is a positive, he said, according to Barron’s. The stock may earn a higher multiple as the possibilities for Netflix play out in gaming, and global content like "Squid Game" thrives.
The stock has climbed 20% so far this year. The company is scheduled to report earnings on Oct. 19.
FAANG Companies Remain Market Leaders
Jim Cramer said in a recent episode of "Mad Money" that the FAANG companies have remained market leaders because they can change their ways.
Cramer said the appeal of FAANG has always been the leading companies' willingness to adapt and change. Remember when Netflix mailed DVDs? Now the company streams its own films. Meanwhile, Amazon has evolved from a "nice-to-have" to a post-pandemic essential service.
Apple is always evolving, with new phones and a slew of new services that users can't live without. Google's YouTube has evolved into one of the most important content channels in the world, meanwhile, Microsoft has been able to raise prices on Office365 without much protest, thanks to their continued innovation, Cramer said.
In a Bloomberg report, which cited sources, Apple is reportedly telling partners that the total number of iPhone models produced will be lower than the 90 million that had been previously expected because both Broadcom and Texas Instruments are struggling to deliver enough components.
"We are buyers of any near-term Apple share price weakness on iPhone supply chain disruption given Apple is likely to receive more supply than competitors, demand isn't perishable, and our FY22 estimates are unlikely to change materially even if revenue and EPS shift across quarters," wrote Morgan Stanley's Katy Huberty.
"When it comes to Apple, I think she's most likely right over the long-term. Apple is still going to benefit from the 5G upgrade cycle, they're still growing their services businesses... if anything, at least for Apple, this is likely a bump in the road. I think where you get into a little more issue will be with the supply chain," said Chris Versace, the co-portfolio manager of the Action Alerts Plus Investing Club.