Netflix stock rallies after Stifel analyst says risk-reward is ‘more attractive’ at current prices

Shares of Netflix Inc.
jumped 1.8% in premarket trading Tuesday, after Stifel Nicolaus analyst Scott Devitt said he is now “more constructive” on the streaming video giant, saying the risk-vs.-reward profile of the stock has become “more attractive” at current prices. “At the current share price, we believe the market may be overlooking the multi-year opportunity for a return to sustainable subscriber growth, with optionality stemming from the company’s upcoming advertising-supported and password-sharing plans,” Devitt wrote in a note to clients. Despite his increased optimism, he kept his rating at hold while he waits for further details related to those plans. He said his preliminary research suggests advertising can be a catalyst for renewed subscriber growth while having a neutral to positive impact on revenue per member. Devitt’s new price target of $240, down from $300, implies 37% upside from Friday’s closing price of $175.51. The stock has plunged 70.9% year to date through Friday, while the S&P 500
has lost 22.9%.

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