Shares of Netflix
NFLX surged 5.36% during regular trading hours Wednesday amid its struggle to regain momentum. So, let's see what had Netflix investors so excited to help decide if now might be time to buy Netflix stock on the dip.
Buckingham Research on Monday raised its Netflix rating from "underperform" to "buy." The firm gave the streaming giant a double upgrade on the back of its discount and its position as a top internet TV platform. "We have always viewed Netflix as the continued top streaming category winner,"
analyst Matthew Harrigan wrote Monday .
Buckingham also upped its Netflix price target from $349 per share to $406 per share. It is worth noting that the firm pointed to Netflix's 27% decline from its summer highs as the "primary upgrade catalyst."
On top Buckingham's buy on the dip-based upgrade, Netflix announced Tuesday a new lineup of animated programming. The company said it would roll out six, all-new projects animated projects, including movies and original series. Netflix noted that nearly 60% of its members watch kids and family content every month.
There has been little Netflix news over the last few days aside from Buckingham's upgrade and its new slate of animated offerings. Therefore, it seems that investors might be thinking seriously about the idea of buying Netflix stock on the dip.
Netflix stock had soared until its now infamous Q2 subscriber miss, with its shares still down nearly 23% from its 52-week high of $423.21 per share as of Wednesday. Yet, Netflix added a total of 7 million subscribers during the third quarter. This blew away its own subscriber growth projections by roughly 2 million and set a new Q3 record.
The streaming firm ended the quarter with 137.1 million subscribers worldwide, up roughly 25% from the year-ago period's 109.25 million. And Netflix doesn't expect this growth to end. The company projected that it will add 7.6 million paid users and 9.4 million total subscribers in Q4.
Netflix ended HBO's
17-year streak at the top of the Emmy nomination list this year, only five years after it started producing original content. Going forward, hit shows will prove key to Netflix's ability to attract and maintain subscribers. This will become even more paramount with Apple AAPL , Disney DIS , and AT&T T all set to release their own streaming platforms.
AMZN continues to push further into streaming video. Luckily, Netflix has amassed a slew of original content offerings and have started to offer more movies with A-list Hollywood stars, which includes Dwayne "The Rock" Johnson and Chris Pine, to name a few.
Looking ahead, our current Zacks Consensus Estimate is calling for Netflix's Q4 revenues to climb 27.97% to reach $4.20 billion. Meanwhile, the company's fiscal 2018 revenues are projected to reach $15.84 billion, which would mark a 35.49% surge.
At the bottom end of the income statement, Netflix is expected to see its Q4 earnings sink 41%. However, the firm's adjusted full-year earnings are expected to skyrocket 108% to reach $2.61 per share.
Netflix has seen its Q4 earnings revision picture turn very negative over the last 30 days. Yet, its fiscal 2018 and 2019 earnings revision activity has been more mixed, which helps Netflix earn a Zacks Rank #3 (Hold).
Therefore, now might not be the best time to buy Netflix stock. But shares of NFLX do still rest well below their 52-week highs. Plus, the company looks poised to add more and more subscribers in a streaming TV industry that is only going to grow.
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