Shares of Netflix Inc. rose to a one-month high Monday, after Oppenheimer’s new analyst covering the streaming video giant spelled out reasons why it’s time for investors to jump back in. The stock
seesawed to a gain of 1.5% to $243.63, after being down as much as 1.8% and up as much as 2.1%.
Analyst Jason Helfstein assumed coverage of Netflix, and raised the rating to outperform from perform. He set a $325 price target on the stock, which implied about 33% upside from Monday’s closing price. Not only will the launch of a lower-priced ad-tier subscription plan attract some first-time subscribers, Helfstein believes there’s a larger opportunity to re-engage those who have previously discontinued service. “Ad-tier launch should accelerate subscriber growth, drive ARPU [average revenue per user] and slow churn,” Helfstein wrote in a note to clients. He also believes Netflix will command high cost per thousand (CPM) from advertisers, given that it sill has the highest viewership in the industry, and as streaming continues to take share from TV. Also read: Traditional TV ‘is marching to a distinct precipice,’ former Disney CEO Iger says. “[Netflix] attracts a significant audience for releases of marquee shows, comparable to awards shows and major sporting events, suggesting the company can sell ads at CPMs well above the normal TV average,” Helfstein wrote. “In addition, it could choose to release shows in conjunction with large advertisers’ product launches.” He believes Netflix’s move to crack down on password sharing, its partnership with Microsoft Corp.
on the ad-supported subscription plan and the move into the gaming arena could offer further upside to results and the stock. With Helfstein’s upgrade 14 of the 45 analysts surveyed by FactSet are bullish on Netflix, while 6 are bearish and 25 are neutral. At …