A longtime bear on Netflix stock on Monday turned positive on the beleaguered video streamer. Wedbush Securities analyst Michael Pachter sees roughly 50% upside for Netflix shares over the next 12 months.
The internet television network has been in a steep slide this year after two disappointing quarterly reports. On April 19, Netflix shocked Wall Street with its first loss of subscribers in a decade and forecast even more subscriber losses this quarter.
In a note to clients, Pachter upgraded Netflix stock to outperform from neutral with price target of 280. On March 9, Pachter raised his rating on Netflix stock to neutral from underperform. He had labeled NFLX stock as a sell for years.
On the stock market today, Netflix stock dipped 0.6% to close at 186.51.
Netflix Stock At Four-Year Low
Netflix stock hit a record high of 700.99 on Nov. 17. It notched a four-year low of 162.71 on May 12.
"We do not believe that Netflix's share price will approach 2021 levels for many years, but think that our price target of $280 is achievable within the next 12 months," Pachter said.
Netflix management will take steps to reduce churn and improve the company's profitability in the months ahead, Pachter said.
To reduce subscriber churn, Netflix will increase its use of a staggered release of episodes for popular shows, such as "Ozark" and "Stranger Things," he said.
To shore up its finances, Netflix will gradually increase prices and add a lower-priced, advertiser-supported service level, Pachter said. The company also is looking to monetize rampant account sharing among users.
Netflix stock ranks fifth out of 23 stocks in IBD's Leisure-Movies & Related industry group, according to IBD Stock Checkup. It has a poor IBD Composite Rating of 38 out of 99. The Composite Rating scores a stock's key growth metrics against all other stocks regardless of industry group.
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