Netflix, Inc. (NASDAQ: NFLX ) - This internet streaming company that initially began as a DVD mail order service now claims the spot as the largest provider of subscription-based streaming in the world. It supplies TV shows and movies to more than 89 million subscribers in the U.S. and international markets.
In mid-October, S&P raised their 12-month price target to $135 from $100 and their earnings estimate for 2016 by 18 cents to 40 cents, keeping 2017's EPS estimate at $1. The raise was due to third-quarter EPS of 12 cents, which was 7 cents above their best guess. They are of the opinion that the stronger-than-expected international subscriber trend will continue into Q4 and beyond into 2017. Standard & Poor's had viewed 2016 as a "transitional year" leading to a substantial profit increase in 2017.
Technically, the stock gapped from $100.73 to $116.50 on the Q3 earnings surprise and jumped to challenge the November 2015 top at $133. Then, the surprising election result, with its negative implications (true or false) for the technology sector, dropped NFLX from $127 to $111.
However, the technical picture for Netflix is still positive, with initial support at its 50-day moving average at about $108, a Golden Cross at $99 and on-balance buying, despite the correction. NFLX is a stock that should be on investors' list of quality stocks to buy on a pullback.
Thus, buy Netflix at $108 for a trade to $130 within 90 days for a projected return of over 20%. NFLX should also be considered by investors seeking longer-term returns from the world's leading source of streaming video content.
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