Stock Jumps as Analyst Declares 'Netflix Has Won'

Macquarie upgraded NFLX to "outperform" from "neutral"

Managing Editor
Jan 2, 2018 at 9:49 AM
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Online streaming subscription service Netflix, Inc. (NASDAQ:NFLX) is soaring this morning after the stock received an upgrade to "outperform" from "neutral" at Macquarie, along with a price-target raise to $220 from $200. In a note to clients, the brokerage firm also stated that the FAANG stock is "miles ahead" of its streaming competition in terms of original content, and asserted, "Netflix has won." This news comes after Netflix disclosed last week that it will be raising compensation for its top executives in 2018.

NFLX just wrapped up an impressive year, picking up 55% in 2017, while managing to finish last Friday back above both its 50-day and 80-day moving averages. Netflix shares are up 2.9% to trade at $197.57 at last check -- about 11.4% below Macquarie's freshly hiked target, and roughly 9% south of its average 12-month price target of $215.33.

In the options pits, traders have shown a significant preference towards calls over puts, with data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) showing a 10-day call/put volume ratio of 1.72 for NFLX. This ratio ranks in the 94th percentile of its annual range, suggesting calls have been bought to open over puts at a faster-than-usual clip during the past two weeks.

What's more, today's note from Macquarie represents just the latest love letter to Netflix from the analyst community. Out of the 36 analysts tracking the shares, 22 have doled out "buy" or "strong buy" recommendations.

However, there is still room for pessimism to unwind among Netflix shorts. Short interest on the stock fell by 7.8% over the past two reporting periods, but continues to represent nearly 6% of NFLX's float. At the streaming stock's average daily trading volume, it would take shorts more than four days to cover their bearish bets.

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