Netflix stock has best day in a year as analysts say subscriber slowdown doesn’t tell the full story

Netflix’s stock soared more than 11%, during a strong day for technology names, for their largest single-day percentage gain since Jan. 20, 2021.

While a subscriber slowdown has pressured Netflix’s stock, Edward Jones analyst David Heger expects that investors could come to appreciate the wider scope of the company’s story.

“We have anticipated that as Netflix’s business matures, investors will increasingly value the stock on financial results rather than subscriber growth,” he wrote. “We still expect that Netflix can grow its long term earnings at a double-digit rate as it further expands into international markets.”

That international expansion offers ample opportunities for subscriber growth as well, Heger added. And he likes the company’s overall positioning because he believes Netflix’s investments in content have helped differentiate the service.

He raised his rating on Netflix’s stock to buy from hold.

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Citi Research’s Jason Bazinet also feels more upbeat about the current setup for Netflix’s stock. While the company could see more “modest” subscriber gains going forward, he thinks that Netflix’s strong pricing power could be a revenue driver.

Bazinet is feeling similarly optimistic about Spotify Technology SA SPOT, +13.46%, which faces the prospect of a subscriber cool-down as well but has room to better monetize its ad-supported offering, in his view. He upgraded both Netflix and Spotify shares to buy from neutral.

Netflix shares have lost 30% over the past month, as Spotify shares have declined 18% and as the S&P 500 SPX, +1.89% has dipped about 6%.