Netflix stock price target raised at KeyBanc Capital on upbeat net adds outlook

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Shares of Netflix Inc. inched 0.3% lower in premarket trading Thursday, in the face of a broader market selloff, after KeyBanc Capital analyst Justin Patterson raised his price target, citing signs that net subscriber additions for the rest of the year are set to beat expectations. The stock’s decline comes as futures for the S&P 500 slumped 1.0% ahead of the open. Patterson reiterated the overweight rating he’s had on the streaming video giant for at least the past three years, while lifting his stock price target to $634, which is 17% above Wednesday’s closing price, from $590. Patterson said recent search data indicates net adds are on track for 9 million for the second half of the year, which is above expectations, which prompted his to raise his third-quarter estimate to 2.8 million and fourth-quarter estimate to $6.2 million. He also believes concerns over churn are overblown, and that international momentum remains strong. “While Netflix may resume its historic conservative guidance, we believe investors will look to content launches (e.g., ‘Over the Moon’) as upside drivers and audience creation abilities (e.g., ‘Cobra Kai’) as upside drivers,” Patterson wrote in a note to clients. “Disney’s recent re-organization speaks to the challenges media companies face in the current landscape, and that Netflix’s combination of content and distribution matters.”
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