Netflix's Stock Jumps, Analysts' Views on Company's Outlook Differ

Netflix red Envelope - H 2011
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Netflix red Envelope - H 2011

Some Wall Street observers raised their price targets following a better-than-expected earnings report, but one compares the company's mix of good and bad news to "Dr. Jekyll & Mr. Hyde."

NEW YORK - Netflix's stock on Thursday jumped back above the $100 mark after the streaming video service provider had posted better-than-expected fourth-quarter results, but Wall Street remained split on the stock.

It was the stock's biggest surge in two years, according to Bloomberg.

Out of the gate, Netflix shares were up 19 percent. As of 10:30am ET, the stock was up 23 percent at $116.87. That gave the company a market value of $6.5 billion.

Credit Suisse analyst John Blackledge boosted hits target price for Netflix shares from $100 to $125 and maintained his "outperform" rating.

"While Netflix remains in a transition period given continued, albeit easing backlash from the pricing changes and international losses, we do not believe the opportunity has changed for Netflix," he said. "We believe the competitive positioning is strong and will look for further inflection points in sub growth and int’l profit progress as catalysts over the next 12 months."

Barclays Capital analyst Anthony DiClemente on Thursday raised his price target on Netflix's stock by $10 to $115 and retained his "overweight" rating.

"We believe better-than-expected domestic streaming subs in the fourth quarter may help alleviate investors' concerns about the ability of that business to restart subscriber growth," he wrote. "While management acknowledged ongoing competition (including a potential standalone offering for Amazon's video streaming product at a lower price point) and sustained increases in content spending, we believe the growth trajectory for the business is improving, reducing some of the uncertainty in the model."

Others on Wall Street remained more bearish on Netflix. Lazard Capital Markets analyst Barton Crockett said on CNBC that he still sees valuation challenges for the company.

And Janney Montgomery Scott analyst Tony Wible retained his "sell" rating on Netflix. "We believe it will be difficult to scale the low margin streaming business that is now cannibalizing the high margin DVD business," he wrote in his report. "Furthermore, it is clear the DVD business accounts for the vast majority of profits and is overvalued. International losses will continue into 2014 while major risks are still on the horizon."

Meanwhile, Vasily Karasyov, analyst at Susquehanna Financial Group, maintained his "neutral" rating on Netflix's stock, even though he adjusted his price target from $60 to $95.

"On the positive side, the domestic streaming subscriber base grew faster than we and the company expected as churn subsided in December," he said. "On the other hand, international net adds were flat vs. 4Q11 after growing 120% in 3Q, supporting our argument that the international opportunity may not be as lucrative as many think."

The title of Karasyov's report signaled how he feels about the good and the bad news at Netflix - "Dr. Jekyll & Mr. Hyde."

Twitter: @georgszalai