Netflix (NFLX) Is Considered a Good Investment by Brokers: Is That True?

Group 1 - Netflix has an average brokerage recommendation (ABR) of 1.68, indicating a consensus between Strong Buy and Buy, based on 42 brokerage firms' recommendations [2] - Out of the 42 recommendations, 27 are Strong Buy (64.3%) and 2 are Buy (4.8%) [2] - The Zacks Consensus Estimate for Netflix's earnings has increased by 0.8% over the past month to $24.58, reflecting analysts' growing optimism [12] Group 2 - The ABR should not be the sole basis for investment decisions, as studies show limited success of brokerage recommendations in predicting stock price increases [4] - Brokerage analysts tend to exhibit a positive bias due to vested interests, often leading to overly optimistic ratings [5][9] - The Zacks Rank, which is based on earnings estimate revisions, is a more reliable indicator of stock price performance compared to the ABR [10][11] Group 3 - The recent change in the consensus estimate and other factors have resulted in a Zacks Rank 2 (Buy) for Netflix, suggesting potential for stock price appreciation [13] - The ABR for Netflix can serve as a useful guide for investors, especially when validated against the Zacks Rank [13]