tiprankstipranks
Trending News
More News >

Seaport Downgrades Netflix Stock (NFLX) to Hold, Warns It ‘Needs Time to Execute’

Story Highlights

Seaport Global Securities downgraded Netflix’s stock from Buy to Hold.

Seaport Downgrades Netflix Stock (NFLX) to Hold, Warns It ‘Needs Time to Execute’

Seaport Research Partners downgraded the streaming giant Netflix’s (NFLX) stock from Buy to Hold, citing doubts about the company’s ability to quickly deliver on its long-term growth plans. In a note to clients, the firm said Netflix “needs time to execute” on expectations related to advertising, content aggregation, launching new user experiences, and regaining market share. Year-to-date, NFLX stock has gained over 45%.

Don’t Miss TipRanks’ Half-Year Sale

The downgrade comes ahead of the company’s Q2 earnings report, scheduled for July 17.

Seaport Sees Limited Upside in NFLX Stock

Seaport Global expects Netflix to raise prices globally through 2030. It also boosted its estimate for ad revenue by about 40%, going above Netflix’s own $9 billion target for that year. Moreover, the firm expects better profit margins as Netflix may avoid costly content bids by making selective distribution deals as an aggregator.

However, despite these positive long-term adjustments, Seaport noted that the average of their estimates points to less than 10% upside from current levels. This limited potential prompted the downgrade to Hold. The firm also highlighted Netflix’s elevated price-to-earnings ratio of over 60 and its current premium to fair value as reasons for a more cautious outlook.

Additionally, Seaport’s four-star-rated analyst David Joyce stated that a lot of long-term opportunity is already priced into NFLX stock.

Is NFLX a Good Stock to Buy?

Turning to Wall Street, NFLX stock carries a Strong Buy consensus rating. Among the 37 analysts covering the stock, 28 have issued Buy recommendations, and nine rate it as Hold. Moreover, the Netflix stock price target of $1,267.50 implies a downside of 2.29% from the current trading level.

See more NFLX analyst ratings

Disclaimer & DisclosureReport an Issue

1