Netflix Inc (NASDAQ:NFLX) shares vaulted higher by some 3 percent in early afternoon trading on Monday, after Brean Capital’s Alan Gould initiated coverage of the stock with a ‘Buy’ rating and $145 price target. The streaming giant “has created an unstoppable lead in the internet TV business and is positioned to dominate the business long term,” Gould told investors in a research note.
The analyst also touched on the company’s massive spending — estimated to reach $25 billion annually five years from now — saying, Los Gatos is “on a path to become the largest spender on entertainment content creating a content moat” to competition. Gould believes that while international losses and investment in original content make Netflix’s stock appear expensive on traditional metrics, after 15 years, it will have 300 million users around the world and generate $19 in revenue per user, for a 29% EBIT margin/operating profitability as a percentage of total revenue, and $25 per share in EPS.
Meanwhile, in related news, Short Hills Capital Partners founder Stephen Weiss said on CNBC’s “Halftime Report” this afternoon that Apple (NASDAQ:AAPL) should buy Netflix to help it with the growth that it’s been missing. According to Weiss, a Netflix acquisition would make “perfect sense” because it brings relevancy to Apple’s service business, a division that is growing quickly and is currently Cupertino’s second-largest behind the iPhone.
Speaking of Apple ; Oppenheimer’s Andrew Uerkwitz told investors in a research note this morning that as the next decade of the iPhone approaches – the iPhone turns 10 in 2017- Cupertino is about to embark on a decade-long malaise as it remains overly dependent on its flagship device.
Uerkwitz also said he believes Apple “lacks the courage” to lead the next generation of innovation such as AI, cloud services and messaging. Instead, the analyst sees Apple becoming more reliant than ever on the iPhone, whose sales he projects will peak in FY2018 at 245 million units.
Over the next decade, Uerkwitz believes Apple stock will generally underperform the market. He acknowledged however, the name did and could outperform in years with radical redesigns.
Stock Action
Apple shares recently lost $0.05 to $111.70. The stock is down 5.28% year-over-year and has gained roughly 7% year-to-date. In the past 52 weeks, shares of Cupertino, California-based company have traded between a low of $89.47 and a high of $119.92.
Apple closed Monday at $111.73. The name has a total market cap of about $596 billion. Meanwhile, at last check, Netflix stock was up $2.64 at $117.85 on heavy volume. Midway through trading Monday, 4.8 million shares of Netflix Inc. had exchanged hands as compared to its average daily volume of 10.85 million shares. The stock ranged in a price between $116.19 to $118.72 after having opened the day at $116.20 as compared to the previous trading day’s close of $115.21.
In the past 52 weeks, shares of Los Gatos, California-based company have traded between a low of $79.95 and a high of $133.27. Shares are down 4.71% year-over-year ; up 3.17% year-to-date.
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