Netflix stock jumped Wednesday after a Wall Street analyst changed his stance on the internet television network from bearish to bullish.
Pivotal Research Group analyst Jeffrey Wlodarczak raised his rating on Netflix stock to buy from sell. He also jacked up his price target to a Street-high 375, from 200.
On the stock market today, Netflix stock rose 2.6% to close at 298.62.
In a note to clients, Wlodarczak said he turned positive on Netflix after re-evaluating the company's subscriber growth prospects.
Netflix Stock 'Relatively Attractive Tech Play'
He believes Netflix will be successful in its effort to turn freeloaders into subscribers by cracking down on account sharing in early 2023. Also, the company's cheaper, advertising-supported service level looks like a winner, he said. That ad-subsidized service launches on Nov. 3.
Wlodarczak now expects Netflix to add 15 million subscribers in 2023, vs. Wall Street's consensus estimate of 12.5 million. Netflix ended the third quarter with 223.1 million subscribers worldwide.
"While competition is heating up, Netflix still provides the most unique and powerful streaming experience globally with a reasonable path to accelerate subscriber growth over at least the next year," Wlodarczak said.
He also thinks Netflix stock could be an acquisition target as early as 2024, with Microsoft the most likely purchaser.
Wlodarczak called Netflix stock "a relatively attractive tech play," given today's market conditions.
NFLX Stock Is A Recent Breakout
Netflix stock has been on a tear since the streaming video leader reported much better-than-expected results for the third quarter late on Oct. 18.
On Oct. 19, Netflix stock broke out of a nine-week consolidation pattern at a buy point of 252.09, according to IBD MarketSmith charts.
On Wednesday, Netflix stock flirted with the 20%-to-25% profit-taking zone from its breakout. In a clear market uptrend, Netflix stock would be subject to the eight-week hold rule, based on IBD trading principles. But IBD market experts are cautioning investors to be careful with trades in the current climate.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
