Analysts Cut Netflix Price Targets Ahead of Earnings

Netflix will report earnings after tomorrow's close

Oct 15, 2018 at 10:11 AM
facebook twitter linkedin

Netflix, Inc. (NASDAQ:NFLX) is scheduled to report its third-quarter results after the market closes tomorrow, Oct. 16, marking the start of FAANG earnings. Ahead of the highly anticipated event, NFLX stock received a round of bearish brokerage notes -- sending the shares down 1.7% this morning to trade at $333.70.

Specifically, Raymond James cut its Netflix price target to $400 from $445, saying rising interest rates could stall growth for the streaming giant. Goldman Sachs, meanwhile, waxed optimistic about the company's earnings potential, but said broad-market headwinds could weigh on the stock in the near term. The brokerage firm lowered its price target on NFLX by $40 to $430.

Widening the scope reveals most analysts are upbeat toward NFLX stock -- a sentiment shared among options traders. The equity's Schaeffer's put/call open interest ratio (SOIR) of 0.86 ranks in the 17th percentile of its annual range, meaning short-term traders are more call-heavy than usual toward Netflix.

Ahead of earnings, short-term options are pricing in elevated volatility expectations, too, per the stock's 30-day at-the-money implied volatility (IV) of 60.6%, which registers in the 98th annual percentile. Meanwhile, Netflix stock's 30-day IV skew of 13.7% ranks in the 96th percentile of its 12-month range, indicating near-term calls are cheaper than their put counterparts, from a volatility perspective.

Looking at the charts, it's been a rough stretch for NFLX, which has sold off alongside the broader tech sector this month. Since its Oct. 2 peak at $386.80, the FAANG stock is down 14.7%. This pullback stalled atop the security's 200-day moving average last week, a trendline that's ushered the shares higher since September 2016.


Now is the time to join our thriving community of Event Traders who consistently profit from every earnings season. With this discounted subscription opportunity, you'll stay ahead of the curve and seize opportunities others miss. Do not let Q3 earnings season pass you by – subscribe now and supercharge your portfolio with expert insights that turn market reactions into profit-generating opportunities!! Don't waste another second... join us right now before the next trade targeting +200% is released!