Citigroup analysts encourage investors to buy on the recent dip that has plagued Netflix Inc. (NASDAQ: NFLX) shares in the past three months. Appropriately, Netflix shares jumped Friday after Citigroup conveyed the recent tumble as a buying opportunity for the entertainment streaming company. Specifically, Citi upgraded Netflix to buy from hold, while Citi analyst Kevin Toomey said: “We view the recent sell-off as an opportunity to own a high-quality, recurring revenue franchise with attractive upside potential.”
Netflix stocks fell to 11.7% last week through the 5 day period. Ultimately, dragging its three-month performance to negative 22.4%, an underwhelming performance compared to the 2.5% loss for the S&P 500. Despite the recent decline, analysts at Citigroup upgraded Netflix to buy from hold. While still supporting their price forecast at $375 a share, which indicates a near 17% upside from last Thursday’s close. Considering Citigroup’s predictions, Netflix shares jumped about 4.5% Friday morning. Trading at $335.65, Netflix has returned nearly 75% for shareholders year-to-date (YTD).
Kevin Toomey said the forecasts for Netflix include streaming growth of 700,000 domestically and 4.75 million internationally in the third quarter. Meanwhile, management is expected to guide those numbers to 1.65 million and 5.75 million for the fourth quarter. Overall, Citi sees 27% total revenue growth for Netflix in 2019. With operating income of about USD 3.4 billion, and earnings per share flourishing 98% to $5.69 next year.