Why Netflix Stock Soared Today
Shares of Netflix (NASDAQ: NFLX) traded 3.5% higher at 3:20 p.m. EST, sparked by a few positive words from an analyst firm. Netflix stock rose as much as 4.5% earlier in the trading session.
Bank of America Securities analyst Jessica Reif Ehrlich restarted the firm's coverage of Netflix this morning. The bank upgraded Netflix by two whole steps, from a "sell" recommendation to a "buy" rating. Reif Ehrlich set her 12-month target price at $370 per share, 24% above Monday's closing price. This target was based on a generous enterprise value-to-earnings before interest, taxes, depreciation, and amortization (EBITDA) ratio, then confirmed with a discounted cash-flow analysis.
Reif Ehrlich's financial model rests on the assumption that Netflix will continue to lead the streaming media market, which the analyst expects to grow many times larger in the long run. In particular, the company is expanding its subscriber base quickly in developing markets overseas.
Source Fool.com
