Analyst: Netflix Can't Meet Lofty Expectations

Other analysts aren't so bearish

Deputy Editor
Jan 9, 2024 at 9:04 AM
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Citigroup downgraded shares of streaming giant Netflix Inc (NASDAQ:NFLX) to "neutral" from "buy," citing unrealistic expectations from Wall Street. Specifically, the analyst said that investors' expectations of a 25% jump in the two-year stacked growth rate is unlikely to happen in the final quarter of 2024. 

Conversely, BMO initiated coverage on NFLX with an "outperform" rating and a $566 price target, while TD Cowen raised its target price to $565 from $500. Coming into today, 22 analysts rated the equity a "buy" or better against 14 "hold" or worse ratings, and its 12-month average target price of $479.03 is a slight discount to last night's close.

Options traders are more bearish. This is per Netflix stock's 10-day put/call volume ratio of 1.02 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which stands higher than 88% of readings from the past 12 months. Echoing this, NFLX's Schaeffer's put/call open interest ratio (SOIR) of 1.25 sits in the 84th percentile of annual readings.

Those looking to weigh on NFLX's next moves should consider options, as its Schaeffer's Volatility Index (SVI) of 25% ranks higher than just 3% of readings from the past 12 months, implying these traders are pricing in low volatility expectations. 

Down 1.7% in premarket trading, Netflix stock is on track to pull back from the $485 level after coming within in a chip shot of two-year highs. The security sported a marginal year-to-date deficit ahead of today, though it's still up more than 50% over the last 12 months. 

 

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