Analyst Targets Nearly 30% Upside For Netflix Stock

The FAANG stock recently found a foothold at a key trendline

Managing Editor
Sep 6, 2018 at 10:03 AM
facebook twitter linkedin


The shares of Netflix, Inc. (NASDAQ:NFLX) are up 2.9% to trade at $350.66 this morning, after receiving a price-target hike to $440 from $360 at RBC -- a 29% premium to last night's close. The analyst in coverage cited strong customer satisfaction trends here in the U.S., and highlighted signs of increasing growth in the U.K. and India.

Netflix stock has not traded above the $400 level since mid-July. An earnings-induced bear gap prompted an extended pullback, although the shares found support at their 160-day moving average. Despite shedding 11% this quarter, the equity still has nearly doubled in the past 12 months. 

In the options pits, call buying has remained en vogue. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), NFLX boasts a 10-day call/put volume ratio of 1.58. This ratio ranks in the 79th percentile of its 12-month range, showing the rate of call buying relative to put buying has been quicker than usual.

Digging deeper, the October 370 call is home to the largest increase in open interest during this time frame, with more than 6,800 contracts added. Data from the major options exchanges confirms notably buy-to-open activity here, indicating options traders are expecting NFLX's rally to extend into October.

Meanwhile, Netflix stock has consistently rewarded premium buyers over the past year. This is per the stock's Schaeffer's Volatility Scorecard (SVS), which is currently docked at an elevated 90 out of a possible 100. This suggests that NFLX has regularly made larger-than-expected moves on the charts, compared to what its options were pricing in.


A Schaeffer's exclusive!

The Expert's Guide

Access your FREE trading earnings guide for Q3 before it's too late!


  
 
Special Offers from Schaeffer's Trading Partners