Internet television network Netflix (NFLX) should be able to ride out a rocky post-pandemic period thanks to its content leadership, a Wall Street analyst said Thursday. NFLX stock rose on the report.
Cowen analyst John Blackledge said he thinks Netflix will deliver better-than-expected subscriber additions in the second quarter. He predicts 1.2 million new subscribers in the June quarter, vs. the company’s guidance for 1 million.
“Our proprietary recurring U.S. survey suggests Netflix continues to lead living-room TV, as 28% of respondents said Netflix has the best video content, well ahead of other streaming and linear services,” Blackledge said in a note to clients.
Blackledge reiterated his outperform rating on NFLX stock with a price target of 650.
In afternoon trading on the stock market today, NFLX stock rose 0.9%, near 532.75.
Netflix Engagement High, Churn Low
Netflix is working through a pull-forward of new subscribers who signed up in 2020 during stay-at-home orders amid the Covid-19 pandemic.
“While engagement remains high and churn is low, investors are focused on timing of the pull-forward effect, with expectations for a second-half 2021 weighted content slate that could drive higher gross adds,” Blackledge said.
Cowen’s monthly surveys of 2,500 U.S. consumers show a big content advantage for Netflix. Based on the most recent survey data, 28.1% of respondents believe Netflix has the best video content. Alphabet‘s (GOOGL) YouTube is second with 15%, followed by basic cable networks at 9.9% and Amazon (AMZN) Prime Video at 9.1%.
Among other streaming services, 6.9% of respondents think Hulu has the best video content. AT&T‘s (T) HBO Max is the top choice of 4.9% of respondents and Walt Disney‘s (DIS) Disney+ nabbed 4.5% of votes.
NFLX Stock In Consolidation Pattern
“Netflix is well positioned as the first choice to stream movies and TV shows online, while the company continues to ramp originals and increase the value proposition of the service,” Blackledge said.
Popular recent content on Netflix includes “Sweet Tooth” and “Shadow and Bone” among TV series. Also popular are movies “Fatherhood” and “Ice Road.”
NFLX stock ranks second out of 19 stocks in IBD’s Leisure-Movies & Related industry group. It has an IBD Composite Rating of 91 out of 99. IBD’s Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better. Roku (ROKU) is the top stock in the group with a Composite Rating of 96.
The Leisure-Movies & Related group ranks No. 21 out of 197 industry groups that IBD tracks. IBD trading guidelines recommend focusing on top stocks in leading industry groups.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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