By Brian Swint
Netflix shares are surging after the company reported earnings on Tuesday after the bell.
The stock gained 10% in premarket trading to $539.62 following strong subscriber growth and revenue gains. Coming into the session it was already up 34% over the past year and 20% in the last three months.
However, Wall Street analysts were cautioning against euphoria. Deutsche Bank downgraded the shares to Hold from Buy, even though it also raised its price target to $525 from $460. Analyst Bryan Kraft said that Netflix’s leadership position is “fully priced into the stock at these levels.”
Needham’s Laura Martin kept a Hold rating on the stock, without giving a price target. She recommends investors consider media stocks more focused on advertising revenue because spending on advertising will pick up this year in the absence of more Hollywood strikes and with elections coming up.
Oppenheimer analysts led by Michael Morris are more bullish. They maintained their Buy rating and raised their price target to $600 from $500. The move was driven by the bigger member base and the outlook for better margins, they said.
KeyBanc analysts raised their price target, moving to $580 from $545 and maintaining an Overweight rating. They’re optimistic about price increases and advertising monetization.
Other companies with streaming services were also rising early Wednesday. Disney added 0.7% in the premarket, as did Amazon. Paramount Global was up 1%.
Write to Brian Swint at brian.swint@barrons.com