Netflix Shares Hit 52-Week High After Strong Third-Quarter Results

Analysts upgrade stock, price targets amid growth of streaming

NEW YORK - Netflix shares hit a new 52-week high before finishing up nearly 13% Thursday after strong third-quarter results late Wednesday.

The stock closed up 12.8% at $172.69. Earlier in the trading session, it exceeded its previous 52-week high of $174.40 when it reached $174.94.

Tony Wible, analyst at Janney Capital Markets, on Thursday upgraded Netflix shares from "sell" to "neutral," citing "more revenue opportunities tied to cord cutting, new pricing models (both subscription and a la carte) and
international expansion that is complemented by near-term benefits of   the streaming transition," among other things.

Jefferies analyst Youssef Squali early Thursday raised his price target on Netflix shares by $20 to $195 and maintained his "buy" rating. "Netflix is emerging as a key winner in the digital entertainment category, given a great value proposition and astute positioning," he said. "The company's early push into streaming is paying off."

Netflix CEO Reed Hastings said in a conference call late Wednesday that his company is now primarily a streaming company that also offers DVD rentals by mail.

Not everyone on Wall Street is bullish on Netflix though. Wedbush Securities analyst Michael Pachter maintained his "underperform" rating on the stock, arguing that while subscriber growth has been exceeding expectations, revenue and profits have been in line with projections due to the lower average revenue from streaming customers. "Netflix will be challenged to grow at its current pace for more than another year, and we expect its premium valuation to contract," he said.

Wible also acknowledged the lower average revenue from streaming customers along with rising content costs, but he said the company's key emerging challenge is a potential shift to usage-based broadband access billing if the FCC rules that cable and telecom operators can use it to offset their high infrastructure cots. "With usage charges of $1 per gigabyte, Netflix would lose its significant price advantage over cable," he said.