Analysts Upgrade Netflix, but it Remains Overvalued

Even after raising their fair value estimate, Morningstar equity analysts think the market is too optimistic on Netflix

Morningstar Equity Analysts 24 July, 2018 | 10:02AM

netflix and chill the digital television provider is overvalued say analysts

We took a fresh look at Netflix (NFLX) in light of the company's recent quarterly results and revised guidance. As a result, we have raised our fair value estimate to $120 per share from $90 to account for slightly faster margin improvement in the U.S. and international segments, faster growth in international net subscriber additions, and slightly faster growth in average monthly revenue per paying member in the United States.

Even with the fair value estimate increase, however, the shares still appear fundamentally overvalued to us. Our one-star rating rests on five key points about narrow-moat Netflix and the competitive landscape in which it operates.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Amazon.com Inc3,204.40 USD0.88
Apple Inc115.04 USD-0.61
Facebook Inc A284.79 USD2.40
Netflix Inc488.28 USD0.63
The Walt Disney Co128.35 USD0.62
Walmart Inc143.85 USD0.21

About Author

Morningstar Equity Analysts  Morningstar stock and fund analysts cover 2,000 mutual funds, 2,100 equities, and 300 exchange-traded funds.

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