Streaming video leader Netflix ( NFLX ) is showing continued strong momentum and its third-quarter guidance looks conservative, investment bank UBS said in a report Wednesday.
[ibd-display-video id=2326990 width=50 float=left autostart=true]UBS analyst Doug Mitchelson raised his 12-month price target on Netflix stock to 225 from 190 and reiterated his buy rating.
Netflix shares were up 3.1%, near 184.75, in afternoon trading on the stock market today .
“We see upside to Q3 guidance based on our analysis suggesting subscriber growth momentum has sustained into Q3 with broad-based year-over-year improvements across almost all markets,” Mitchelson said. “This despite what appears to be a weaker original content slate vs. Q3 2016, suggesting growth is being driven more by the overall breadth of content on Netflix, streaming hitting critical mass in many international markets and strong marketing and tech execution.”
Netflix’s third quarter faces tough comparisons to the year-earlier period when smash-hit sci-fi horror drama “Stranger Things” premiered on the internet TV network.
Netflix’s fourth quarter has what looks like a very strong release slate in both quality and quantity, Michelson said.
Notable content in the current quarter includes the second season of “Stranger Things,” the premiere of “Marvel’s The Punisher,” the Will Smith fantasy film “Bright,” and the detective series “Mindhunter” from director David Fincher.
IBD’S TAKE: Netflix stock has been forming a cup-with-handle base for the past 10 weeks with a buy point of 190.05. For more analysis of Netflix stock, visit the IBD Stock Checkup .
Netflix is facing heightened competition in the subscription video-on-demand space from Amazon.com ( AMZN ), CBS ( CBS ), HBO, Hulu and others.
On Wednesday, Piper Jaffray analyst Michael Olson maintained his overweight rating and price target of 215 on Netflix stock.
“Our analysis of Netflix search trends (on Google) suggests Q3 upside for both international and domestic subscribers.”
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