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Why Netflix (NFLX) is a Strong Buy Ahead of Earnings

By Dan Simms, Stock Reporter
October 10, 2024 1:51 PM UTC
Why Netflix (NFLX)  is a Strong Buy Ahead of Earnings

The Dow had a big day yesterday — so did Reddit. Here’s what our research team is following today:

🔥 HOT: Health and home and beauty designer Helen of Troy (NASDAQ: HELE) gained 17.9% on Wednesday after beating its earnings and revenue estimates by 15.6% and 3.4%, respectively. The company’s third-quarter sales decreased 3.5% year over year, but that didn’t stymie the market’s enthusiasm for the stock’s unexpected outperformance. Despite Wednesday’s gain, HELE remains down 38.6% YTD.

🥶 NOT: Internet ranking and keyword research company SEMrush (NYSE: SEMR) lost 3.7% on Wednesday as it continues to struggle after Google’s major SEO changes earlier this year. Analysts continue to rate the company as neutral, although SEMR has lost 2.6% this year after gaining more than 65% in 2023. The future for SEMrush is uncertain as the search industry transitions from traditional search engines to AI-based tools, which dramatically reduces the impact of SEO tools.

🔥 HOT: Shares of Reddit (NYSE: RDDT) gained 0.3% on Wednesday after Jefferies initiated its coverage of the social media giant with a buy rating and a price target of $90 per share. Needham also raised its price target for the company from $75 to $85 per share. Reddit closed Wednesday trading at $71.00 per share, so analysts see the current upside for the stock as between 20% and 27%.

🥶 NOT: Uranium producer Energy Fuels (NYSE: UUUU) lost 3.6% on Wednesday despite overall enthusiasm for the stock as experts tout nuclear power as a viable option for meeting the country’s ever-increasing energy needs. UUUU is down 25.4% YTD yet maintains a strong buy rating from top Wall Street analysis firms. UUUU’s five-year return is 175%.

📈 Want more? Check out the biggest winners and biggest losers on WSZ. 

Invest Smarter: Strong Buy Picks From Wall Street Pros

One of WallStreetZen’s most popular services? Strong Buy Stocks from Top Wall Street Analysts, a feature that gives you dozens of high-quality Strong Buy alerts per week. It’s a perk of your premium membership, but here’s a free sampling so you can test the waters:

Netflix Inc. (NASDAQ: NFLX)

⭐ Upcoming earnings (10/17)

Analyst/Firm: Doug Anmuth / JP Morgan

Analyst ranking: Top 1% / average return +32.12% / win rate 70% 

Yesterday’s market close: $727.43

Price target: $750.00

  • JP Morgan's Doug Anmuth reiterated their Strong Buy rating on Netflix (NASDAQ: NFLX). The analyst also maintained a $750 price target in advance of NFLX’s earnings, coming up on 10/17. 
  • Investors have "elevated expectations in the print," Anmuth said, evident from the stock price gaining 17% from its August lows and now at all-time highs. Even so, the analyst reported that JPMorgan remains "bullish" on Netflix's ability to ramp revenue in the mid-teens in FY 2024 and FY 2025, low double-digits in FY 2026, as well as further expand margins and drive multi-year free cash flow growth. 
  • Paid Sharing has become a "more normal course of business, but remains a meaningful driver," Anmuth detailed. 
  • And, looking ahead, the analyst said that their firm believes "Netflix can become a major advertising player as scale and monetization build in 2025 and beyond."
  • Near term, Anmuth added that JP Morgan predicts upside to Netflix management's FY 2024 free cash flow guidance.
  • See why some analysts believe NFLX could top $900.

1-year chart for NFLX, courtesy TradingView

Nvidia Corp. (NASDAQ: NVDA

Analyst/Firm: C J Muse / Cantor Fitzgerald 

Analyst ranking:  Top 3% / average return +25.3% / win rate 62% 

Yesterday’s market close: $132.65

Price target: $175.00 

  • Cantor Fitzgerald's C J Muse reiterated their Strong Buy rating and a $175 price target on Nvidia (NASDAQ: NVDA).  
  • Muse reported that Nvidia remains Cantor Fitzgerald's "Top Pick."
  • An update to Nvidia's Investor Presentation included further information regarding inference and how OpenAi's o1 models "start inference-time scaling law," a concept that the firm thinks is undervalued by the Street, the analyst told investors.
  • According to Muse, the new models implement "chain-of-thought reasoning," leading to a significant rise in computing demands given the exponential scaling of inference computations for improved accuracy. 
  • On another front, Nvidia announced that its "Blackwell" platform is currently in "full production," which bodes well for a "revitalization of the Nvidia trade over the coming months," the analyst noted.
  • Will NVDA gain 50% in the coming year? Here’s what pros have to say.

1-year chart for NVDA, courtesy TradingView

Microsoft Corp. (NASDAQ: MSFT)

⭐ Upcoming earnings (10/22)

Analyst/Firm: Joel Fishbein / Truist Securities

Analyst ranking: Top 10% / average return +9.43% / win rate 61% 

Yesterday’s market close: $417.46

Price target: $600.00

  • Truist Securities's Joel Fishbein reiterated their Strong Buy rating and maintained a $600 price target on Microsoft (NASDAQ: MSFT).  
  • Ahead of the 10/22 release of Microsoft's earnings report, Fishbein told readers that Truist Securities took "a deep dive into the company's cybersecurity business."
  • The analyst said that their firm's research "confirmed that cybersecurity has become an increasingly important area for Microsoft."
  • The firm believes that the company's "comprehensive security solutions are at a scale unmatched by competitors and are likely to be a long-term growth vector," Fishbein continued, "because of Microsoft's potential to gain market share as a consolidator in the security stack."
  • See more analyst forecasts for MSFT here. 

1-year chart for MSFT, courtesy TradingView

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