On Monday, analysts discussed notable developments in the stock market concerning a major streaming company and a tech giant. Piper Sandler upgraded Netflix’s stock status to “overweight” from “neutral,” while Jefferies downgraded Apple’s stock to “hold” from “buy.” Here are the latest updates from these analyses:
At 5:41 a.m., Jefferies analyst Edison Lee lowered Apple’s stock rating, citing oversized expectations for the iPhone that might lead to potential drawbacks. Lee expressed concerns about the high expectations for the iPhone 16 and 17, noting weaker-than-expected initial demand. Additionally, he pointed out that Apple’s smartphone technology’s artificial intelligence capabilities are unlikely to be commercialized for another two to three years. Lee emphasized that smartphones currently lack the high-speed memory and advanced packaging technology required for fast data transfer, which limits their AI capabilities. He believes that anticipating an accelerated smartphone replacement cycle due to AI advancements is premature. Despite this, Apple’s stock has risen approximately 18% in 2024 and over 33% in the past six months.
In contrast, at the same time, Piper Sandler’s analyst Matt Farrell upgraded Netflix to “overweight.” Farrell justified Netflix’s high valuation and elevated his price target to $800 from $650, suggesting an 11.2% upside from Friday’s closing price. He acknowledged Netflix’s leadership in the streaming sector and recognized the company’s high valuation as warranted. Netflix trades at a forward price-to-earnings ratio significantly above the S&P 500’s. Farrell noted future opportunities in the ads-free business, especially concerning pricing, while the ads-based tier has been largely stabilized for the coming year. He also highlighted that Netflix’s subscription model is becoming more appealing in a potentially weaker macroeconomic environment, given its upcoming content slate.
However, not all analysts shared this optimism regarding Netflix. Barclays analyst Kannan Venkateshwar downgraded Netflix to “underweight” from “equal weight,” maintaining a $550 price target, which implies a downside of more than 23%. Venkateshwar observed that, over the past few years, Netflix has increasingly relied on new growth drivers to maintain double-digit revenue growth. He warned that some strategies, like paid sharing, might accelerate future growth prematurely. He stressed that, despite these efforts, growth is slowing, and each move comes with its trade-offs. Netflix shares have increased nearly 48% year to date.
