A Bernstein analyst believes Netflix shares will hit bottom at $230 per share.
Shares of Netflix have continued their steady descent over the past couple of months. Investor confidence was shaken after Netflix released a disappointing earnings report in July.
The earnings report showed that during the second quarter, the company lost U.S. subscribers and that its international subscriber growth slowed. Since then, the stock has fallen by nearly 20%.
And increasingly, investors are asking when the shares will bottom out. But according to one Bernstein analyst, this could happen sooner rather than later.
Analyst Todd Juenger acknowledged that it’s hard to set a baseline for this since the company has experienced “several transformations in the last decade.” But according to his research, Juenger estimated that the “floor price” for Netflix stock is $230 per share.
Here’s why Netflix is still a good buy
Anytime a stock drops significantly, people will wonder if this is a good opportunity to buy in or if it’s a sign that the company is going downhill. But when it comes to Netflix, Juenger seemed confident that the company will hang onto its pricing power.
And this is not a lone opinion when it comes to Netflix. Out of the 31 analysts reviewing the stock, 25 give it a buy rating. And the average price target is $412.89, which represents an upside of 44%. Here are a couple of reasons why Netflix is still a good investment.
Netflix continues to improve its content lineup
This week, Netflix announced it had secured the global streaming rights for the iconic television series Seinfeld. The company purchased the right from Sony Pictures Television.
Starting in 2021, Netflix will have the right to stream 150 episodes of Seinfeld to its subscribers. This is an essential next step for Netflix since the company recently lost Friends and The Office, two of its most popular television series.
The streaming wars are overblown
Finally, Netflix is still a good investment and the streaming wars have been mostly overblown. Yes, there is more competition now but Netflix is a household name. So it seems unlikely that consumers will just entirely abandon it once new services launch.
As more options become available, it seems likely that consumers will invest in multiple streaming services. And Netflix appeals to a much broader audience than both Apple and Disney.