UBS Bets On Netflix As It Foresees A Subscriber Boon For The Streaming Service

Ahead of Netflix’s (NFLX) July 20 second quarter earnings report, UBS has raised the company’s price target on expectations of accelerated subscriptions for the streaming service.

According to CNBC, Analyst John Hodulik said in a note to clients on Thursday that Netflix is set to beat its low guidance for Q2, and then its subscriptions will increase in the second part of the year.

The note obtained by the news outlet read in part, “App downloads suggest upside to [management]’s guide for 1M net adds in 2Q given strength in Asia and we are increasing our estimate to 1.9M from 1.0M. We expect ramping content production and the return of popular series ... as well as tent pole films ... to help drive stronger sub growth going forward.”

Based on these estimates, Hodulik priced Netflix’s stock at $620 per share, up from $600 – a 13% increase from where the stock closed on Wednesday. UBS also reaffirmed its buy rating for Netflix in the note, CNBC reported.

Netflix has seen its stock stall in 2021 as the economy begins to recover with the rollout of the COVID vaccines and ease back of coronavirus restrictions that allow people to return to entertainment options outside their homes. In addition, the delay of Hollywood movie releases due to pandemic restrictions has caused more struggles for the stock, CNBC said.

During 2020, at the height of the pandemic, streaming companies like Netflix flourished as people were forced to stay in their homes during lockdowns. Many viewers turned to these streaming platforms for entertainment.

In the second quarter of 2020, Netflix added 26 million subscribers compared to 12 million in 2019. It also reported a revenue increase of 25% year-over-year, exceeding $1 billion.

Netflix is also in the early stages of developing a gaming service that could be launched next year.

Shares of Netflix were trading at $543.06 as of 10:45 a.m. EDT on Thursday, down $4.89, or 0.89%.