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Netflix (NFLX) Soars 5.2%: Is Further Upside Left in the Stock?

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Netflix (NFLX - Free Report) shares rallied 5.2% in the last trading session to close at $634.81. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 2.2% gain over the past four weeks.

Recent share price gains have been fueled by the return or debut of well-known titles, including new seasons of The Witcher and the sitcom Seinfeld. But the latest push has come from South Korean action-thriller Squid Game, whose massive popularity appears to be an early indicator of stronger user trends.

This internet video service is expected to post quarterly earnings of $2.57 per share in its upcoming report, which represents a year-over-year change of +47.7%. Revenues are expected to be $7.48 billion, up 16.3% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Netflix, the consensus EPS estimate for the quarter has been revised 6.8% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on NFLX going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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