Netflix should be bought if it withdraws, two traders told CNBC after the shares hit a record high on Tuesday.
Atlantic Equities raised its stock price target to a maximum of $ 780 per share, citing international adoption in Japan, India and Latin America, formerly Brazil. Netflix ended up trading nearly 3% at $ 606.71.
“With a relative price-to-sales ratio, stocks are expensive, but not stupid,” Laffer Tengler Investments Investment Director Nancy Tengler told Trading Nation.
While Netflix faces a fair share of headwinds (high content costs, negative operating cash flows, negative free cash flows, and the slow liquidation of home life), it also has the power to fix prices, a five-year withholding rights to “Seinfeld” and a target of up to 260 million subscribers worldwide by 2024, he said.
“If you don’t own it and want to, choose it slowly,” Tengler said. “But it’s an expensive stock and a lot of the good news comes at a price, so you can get better opportunities.”
With analysts expecting Netflix to grow earnings per share by 23% next year, it looks like the shares have some clue, Inside Edge Capital Management founder Todd Gordon said in the same interview.
“That means 47 times advanced earnings which, as Nancy said, isn’t stupidly expensive, but it’s expensive,” he said. “In the event of a setback, I would like to buy more.”
Broadcast customers could also be more aware of the costs as economic stimulus programs end, giving way to timely falls in Netflix stocks, Gordon said.
“I think you can add anything that reaches 575 if you’re not on it yet,” he said.
Disclosure: Gordon owns shares of Netflix.
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