Bull Notes Flood Netflix Stock After Sell-Off

Piper Jaffray underscored its "overweight" rating, while UBS lifted its NFLX price target

Oct 11, 2018 at 10:03 AM
facebook twitter linkedin


The shares of Netflix, Inc. (NASDAQ:NFLX) plunged 8.4% during Wednesday's tech rout, marking their biggest one-day drop since July 19, 2016. Nevertheless, analysts are staying upbeat toward the FAANG stock, with several issuing bullish notes overnight.

For starters, Piper Jaffray reiterated its "overweight" rating and $420 price target for NFLX -- a 29% premium to last night's close -- saying trends signal potential upside in third-quarter international subscriber growth. The analyst in coverage also suggested the streaming service has room to raise prices. Elsewhere, UBS raised its Netflix price target to $365.

This optimism is nothing new for analysts, considering 22 of 33 maintain a "buy" or better rating on NFLX stock. Plus, the average 12-month price target of $382.07 stands at a roughly 17% premium to current trading levels.

Options traders have been bullish on Netflix, too. While the October 340 call and put are home to peak front-month open interest of about 16,000 contracts apiece -- likely used to initiate a spread back in August -- the October 360 call has seen one of the biggest increases in open interest over the past two weeks. Data from the major options exchanges confirms buy-to-open activity here, indicating call buyers expect NFLX to break back above $360 by expiration at the close next Friday, Oct. 19.

The lifetime of these front-month options includes Netflix's third-quarter earnings report, due after the close next Tuesday, Oct. 16. NFLX stock fell 5.2% after the streaming giant unveiled a big miss in subscriber growth. The FAANG stock has shed another 13.1% since then, but is up 1.1% this morning at $329.47, after finding a foothold near its 200-day moving average in yesterday's sell-off.

 

If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!

 


 


 
Special Offers from Schaeffer's Trading Partners