(CTN News) – Piper Sandler notes that Netflix is still a “business in transition” that investors should monitor and not buy yet, even though shares are down more than 70% from their highs. Netflix’s price target was lowered by 28% by analyst Thomas Champion.
The analyst said that stiffer competition, higher inflation, and weaker consumer spending will continue to challenge the streaming company. “We continue to view NFLX as a company in transition,” Champion wrote.
A crowded streaming market may have concealed Covid’s sluggish subscriber growth. In the short term, Stranger Things 4 may provide relief, but the Top 10 hours are mixed. The ad-supported opportunity is positive, but it will take time.”
Piper Sandler cut the price target from $293 to $210. It is roughly 17% higher than Friday’s closing price. Netflix’s user growth remains “subdued” despite the popularity of Stranger Things 4, the streaming company’s second-most-watched show behind last year’s Squid Game.
Streaming of the “Top 10” shows declined 4% quarter over quarter, the note said. Ad-supported tiers could mean Netflix’s revenue could increase more than $1 billion per quarter, Piper Sandler says.
Still, the analyst wonders whether management is being more reactive than proactive. Netflix shares dipped 0.5% in premarket trading Tuesday. -CNBC’s Michael Bloom contributed to this report.
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