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Shares of Netflix (NFLX - Free Report) were up more than 4.5% in morning trading Tuesday as analysts praised the video streaming company’s original content strategy and reignited rumors that the brand could be a candidate for a takeover by Apple (AAPL - Free Report) .
“Netflix is miles ahead in terms of programming hours, original content quality and time spent, and we don't expect this to change. Netflix has won,” wrote Macquarie Research Tim Nollen on Tuesday.
Macquarie raised its rating for the stock to outperform from neutral and increased its price target to $220 from $200. The firm’s updated call would represent a 15% climb from Friday’s closing price. Nollen also mentioned that he expects Netflix to reach 60% original content by 2020, saving the company $2 billion in licensing fees.
“Netflix has changed the way people watch TV, and is now pushing further into film. Consumers' increasing lack of tolerance for advertising drives them to subscription OTT services,” the analyst said.
Meanwhile, analysts from Citigroup stoked rumors that Netflix could find itself in the crosshairs of Apple soon. In a note to clients, Citi’s Jim Suva and Asiya Merchant wrote that the Cupertino-based tech behemoth is gearing up to make a major acquisition of a car company, video game company, or entertainment company—and Netflix is apparently the most likely target right now.
Citing the passage of the GOP’s tax reform bill, which includes a one-time allowance for companies to repatriate overseas cash, the analysts said that Apple will finally put its $252 billion cash pile to use. According to their note, there is a 40% likelihood of Apple acquiring Netflix. Other potential targets include Disney (DIS - Free Report) , Electronic Arts (EA - Free Report) , Activision Blizzard , and Tesla (TSLA - Free Report) .
“The firm has too much cash – nearly $250 billion – growing at $50 billion a year. This is a good problem to have,” wrote Suva and Merchant. “With over 90% of its cash sitting overseas, a one-time 10% repatriation tax would give Apple $220 billion for M&A or buybacks.”
Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
Zacks Editor-in-Chief Goes "All In" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
Image: Bigstock
Here's Why Netflix (NFLX) Stock Is Climbing Today
Shares of Netflix (NFLX - Free Report) were up more than 4.5% in morning trading Tuesday as analysts praised the video streaming company’s original content strategy and reignited rumors that the brand could be a candidate for a takeover by Apple (AAPL - Free Report) .
“Netflix is miles ahead in terms of programming hours, original content quality and time spent, and we don't expect this to change. Netflix has won,” wrote Macquarie Research Tim Nollen on Tuesday.
Macquarie raised its rating for the stock to outperform from neutral and increased its price target to $220 from $200. The firm’s updated call would represent a 15% climb from Friday’s closing price. Nollen also mentioned that he expects Netflix to reach 60% original content by 2020, saving the company $2 billion in licensing fees.
“Netflix has changed the way people watch TV, and is now pushing further into film. Consumers' increasing lack of tolerance for advertising drives them to subscription OTT services,” the analyst said.
Meanwhile, analysts from Citigroup stoked rumors that Netflix could find itself in the crosshairs of Apple soon. In a note to clients, Citi’s Jim Suva and Asiya Merchant wrote that the Cupertino-based tech behemoth is gearing up to make a major acquisition of a car company, video game company, or entertainment company—and Netflix is apparently the most likely target right now.
Citing the passage of the GOP’s tax reform bill, which includes a one-time allowance for companies to repatriate overseas cash, the analysts said that Apple will finally put its $252 billion cash pile to use. According to their note, there is a 40% likelihood of Apple acquiring Netflix. Other potential targets include Disney (DIS - Free Report) , Electronic Arts (EA - Free Report) , Activision Blizzard , and Tesla (TSLA - Free Report) .
“The firm has too much cash – nearly $250 billion – growing at $50 billion a year. This is a good problem to have,” wrote Suva and Merchant. “With over 90% of its cash sitting overseas, a one-time 10% repatriation tax would give Apple $220 billion for M&A or buybacks.”
Want more stock market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!
Zacks Editor-in-Chief Goes "All In" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
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