Wall Street Analysts Look Bullish on Netflix (NFLX): Should You Buy?

Core Viewpoint - Analyst recommendations play a significant role in influencing stock prices, but their reliability is questionable, particularly for Netflix (NFLX) [1][5]. Brokerage Recommendations - Netflix has an average brokerage recommendation (ABR) of 1.75, indicating a consensus between Strong Buy and Buy, based on 46 brokerage firms [2]. - Out of the 46 recommendations, 28 are Strong Buy (60.9%) and 3 are Buy (6.5%) [2]. Limitations of Brokerage Recommendations - Solely relying on ABR for investment decisions may not be advisable, as studies indicate that brokerage recommendations often fail to guide investors effectively [5]. - Analysts from brokerage firms tend to exhibit a positive bias due to vested interests, leading to a disproportionate number of favorable ratings compared to negative ones [6][10]. Zacks Rank as an Alternative - Zacks Rank, a proprietary stock rating tool, categorizes stocks from Strong Buy to Strong Sell and is based on earnings estimate revisions, which correlate strongly with stock price movements [8][11]. - The Zacks Rank is distinct from ABR; while ABR is based on brokerage recommendations, Zacks Rank utilizes quantitative models and is updated more frequently [9][12]. Current Earnings Estimates for Netflix - The Zacks Consensus Estimate for Netflix's earnings has increased by 2.9% over the past month to $26.06, reflecting analysts' growing optimism [13]. - This increase in consensus estimates, along with other factors, has resulted in a Zacks Rank of 1 (Strong Buy) for Netflix, suggesting a potential for stock appreciation [14].