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Deutsche Bank upgrades Netflix to Buy but cuts price target
Ahead of Netflix earnings in less than three weeks, Deutsche Bank reduced its price target to $95 and lowered earnings estimates even as it lifted the stock rating to Buy.
Deutsche Bank upgraded Netflix to a Buy rating but cut its price target, in a move that investors are treating as a sign the bank sees a more favorable risk-reward than the stock price suggests, despite a weaker earnings outlook. The downgrade of its target was paired with lower earnings estimates and a reduction in operating-income and free-cash-flow expectations, according to MarketBeat Ratings.
The Netflix shares have been stuck in a multi month downtrend and were trading around $70, close to levels seen nearly two years ago, adding pressure as the company’s next earnings report is due in less than three weeks. MarketBeat Ratings said the upgrade effectively reflects Deutsche Bank’s view that the stock has become cheap relative to Netflix’s strategic position, even though it did not indicate that earnings expectations had improved.
MarketBeat Ratings also noted other Wall Street firms are taking different stances ahead of the report. It said Evercore ISI raised its target, while HSBC and Wells Fargo turned bearish ahead of Netflix’s earnings in about three weeks.
The debate now centers on whether Netflix’s earnings results will validate the call, with Deutsche Bank’s analyst saying the stock became attractive enough to shift the balance for investors, while the near term figures remain in focus.