Markets

Trade of the Day: Netflix, Inc. (NFLX) a Buy on the Pullback

A generic image of a person on their laptop
Credit: Shutterstock photo

InvestorPlace InvestorPlace - Stock Market News, Stock Advice & Trading Tips

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.

Click to Enlarge

The Nasdaq and Tech Stocks Quietly Lead

The Nasdaq was almost unheralded as it broke to a new closing high at 5,531.82. The junior index has jumped almost 30% from its February low, and yet on Monday most investors were focused on the Dow and its attempt to overcome the 20,000 line.

The post Trade of the Day: Netflix, Inc. (NFLX) a Buy on the Pullback appeared first on InvestorPlace .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

NFLX

Other Topics

Stocks