Netflix stock has dropped enough to make it an attractive investment opportunity, with multiple catalysts for growth ahead, writes one Phillip Securities analyst. Shares are still headed for their lowest close in two years.
Helena Wang upgraded shares of Netflix to Buy from Accumulate while maintaining a $110 price target on Monday. This upgrade comes after Netflix stock dropped 7.3% on Friday after the streaming giant reported mixed second-quarter financial results and shared disappointing guidance Thursday night.
"The recent share price weakness appears to be driven more by elevated investor expectations and slightly softer near-term outlook than by any deterioration in fundamentals," Wang wrote.
Despite the upgrade, Netflix stock was down 1.5% to $67.89 on Monday and was on pace for its lowest close since Sept. 10, 2024, according to Dow Jones Market Data.
On top of the disappointing earnings results, Wall Street wasn't happy with the company's decision to delay how often it provides engagement updates. Netflix said on Thursday night that it would start publishing its "What we Watched" report once a year in the first quarter, beginning in 2027. This report has normally been published biannually.
This decision comes as some shareholders worry that competition is eating at viewership.
"Investor concerns have also been fueled by slowing user engagement growth and Netflix's decision to report engagement metrics less frequently, making it more difficult for the market to evaluate the company's long-term growth trajectory," Ed Egilinsky, managing director at Direxion, wrote on Friday.
Netflix management tried to encourage investors with current engagement trends when the company published the "What we Watched" report on Thursday.
The report said that from January 2026 to June, audiences watched more than 97 billion hours on Netflix -- the highest view hours to date for a half-year -- across a variety of genres and languages.
Wang believes that engagement report, along with a scaling advertising business and the streaming service's ability to raise prices and retain customers, means the business is in a strong position to improve in the coming months.
Shares have also dropped 28% this year. The stock is now trading at 18.2 times earnings expected over the next 12 months, which is far below its five-year average of 32.3 times forward earnings.
"NFLX's previous premium valuation had limited upside in our view, the recent pullback has created a good opportunity for investors to build a position," Wang wrote.
Write to Angela Palumbo at angela.palumbo@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
July 20, 2026 13:11 ET (17:11 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments