In recent trading, shares of Netflix Inc (Symbol: NFLX) have crossed above the average analyst 12-month target price of $432.84, changing hands for $438.97/share. When a stock reaches the target an analyst has set, the analyst logically has two ways to react: downgrade on valuat
Below is Validea's guru fundamental report for NETFLIX INC (NFLX). Of the 22 guru strategies we follow, NFLX rates highest using our Twin Momentum Investor model based on the published strategy of Dashan Huang. This momentum model looks for a combination of fundamental momentum
Amazon.com said on Tuesday it is planning to invest about $7.2 billion through 2037 in Israel, and launched its Amazon Web Services (AWS) data centers in the country.
Roku (NASDAQ:ROKU) published its Q2 2023 results on Thursday, beating estimates on key metrics including subscriber additions and overall revenue growth, taking the stock up by about 8% in after-hours trading on Thursday. While revenues rose by 11% year-over-year to $847 million,
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At Holdings Channel, we have reviewed the latest batch of the 25 most recent 13F filings for the 06/30/2023 reporting period, and noticed that Netflix Inc (Symbol: NFLX) was held by 10 of these funds. When hedge fund managers appear to be thinking alike, we find it is a good ide
Netflix (NASDAQ: NFLX) has long been the king of streaming and that has made it a market darling, but some are starting to wonder if its reign may be near an end.
Shares of Roku (NASDAQ: ROKU) recently surged more than 30% in response to a second-quarter earnings report the company announced after the market closed on Thursday, July 27.
Media-streaming platform veteran Roku (NASDAQ: ROKU) turned some heads with a strong earnings report on Friday. The company beat management's guidance targets across the board, ran rough-shod over Wall Street's guidance-based estimates, and sent the stock skyrocketing. When the c
Below is Validea's guru fundamental report for NETFLIX INC (NFLX). Of the 22 guru strategies we follow, NFLX rates highest using our Twin Momentum Investor model based on the published strategy of Dashan Huang. This momentum model looks for a combination of fundamental momentum
Walt Disney (NYSE: DIS) hasn't been a market favorite this year, but there is a lot to like about its position in media. It has a huge streaming business, and the parks are performing well. In this video, Travis Hoium lays out why Disney is going to be a winner in media long-term
Several
tech stocks have recovered strongly this year in hopes of better business conditions and growing expectations about the prospects in generative
artificial intelligence (AI). The recently reported results for the June quarter indicate the resilience of the business models of many tech giants. We used
TipRanks’ Stock Comparison Tool to place Alphabet (
NASDAQ:GOOGL,
GOOG
), Microsoft (
NASDAQ:MSFT
), and Netflix (
NASDAQ:NFLX
) against each other to find the most attractive tech stock as per Wall Street analysts.
Alphabet (NASDAQ:GOOGL, GOOG)
This week Alphabet impressed investors with its
upbeat second-quarter results. The
Q2 earnings per share (EPS) increased 19% to $1.44, driven by a 7% rise in revenue to $74.6 billion and an improvement in operating margin.
The Google parent attributed the Q2 2023 performance to continued resilience in Search, acceleration of revenue growth in both Search and YouTube, and momentum in Cloud business.
In particular, Google Cloud’s revenue increased 28% year-over-year to $8 billion, with the segment generating an operating income of $395 million compared to an operating loss of $590 million in the prior-year quarter. This marked the second consecutive quarter of operating income for Google Cloud.
Is GOOGL Stock a Buy or Sell?
Several analysts raised their price target for Alphabet following the results. On Wednesday,
Truist analyst Youssef Squali increased his price target for GOOGL to $160 from $122 and maintained a Buy rating on the stock after the Q2 print. Squali believes that the second quarter reflected faster recovery for Search and YouTube and sustained momentum in Google Cloud.
The analyst added that the improvement in Alphabet’s business came in as the management is focusing on controlling costs and directing its investments toward its highest growth priorities. The analyst expects to see further growth acceleration in the second half of this year along with margin expansion.
Wall Street has a Strong Buy consensus rating on GOOGL with 30 Buys and five Holds. The average price target of $149.45 implies 15.5% upside.
Shares have rallied about 49% since the start of this year.
Microsoft (NASDAQ:MSFT)
Microsoft has gained a lot of attention this year due to its aggressive initiatives to capture generative AI opportunities and significant investments in OpenAI, the start-up behind
ChatGPT.
Earlier this week, the company reported an
8% growth in its fiscal fourth-quarter revenue to $56.2 billion and a
21% rise in EPS to $2.69. Still, shares declined following the results as the company’s guidance fell short of expectations due to persistent weakness in the PC market. Moreover, Azure and other cloud services’ revenue growth of 26% surpassed estimates but marked a deceleration from the 27% growth seen in the fiscal third quarter.
Looking ahead, the company assured that it remains focused on three key priorities – driving further adoption of Microsoft Cloud, investing to lead in the ongoing AI platform shift, and driving operating leverage.
Is Microsoft a Buy, Sell, or Hold?
On Wednesday,
RBC Capital analyst Rishi Jaluria increased the price target for Microsoft to $390 from $350 and reiterated a Buy rating on the stock. Jaluria noted that the company delivered strong results and outlook despite the ongoing macro challenges.
However, he thinks that the reason for the stock's decline following the results lies in investor optimism. Jaluria suggests that investors were too optimistic about the timeline for cloud spending optimization headwinds to fade away and AI benefits to commence.
Nonetheless, Jaluria contends that Microsoft's multi-year reacceleration story remains intact and will likely start to reflect in the second half of this year.
Microsoft scores a Strong Buy consensus rating based on 28 Buys, one Hold, and one Sell. At $391.69, the average price target implies 18.4% upside.
MSFT shares have risen 39% year-to-date.
Netflix (NASDAQ:NFLX)
Streaming giant Netflix’s Q2 2023
adjusted EPS increased 2.8% to $3.29 and handily surpassed analysts’ estimates. However, the company’s
revenue of $8.2 billion, which grew 2.7% year-over-year, lagged expectations.
Nonetheless, the company assured investors that it expects its top-line growth to accelerate in the second half of 2023, as it anticipates seeing the full benefits of its paid sharing plans and continued growth in its ad-supported plan.
Netflix expects its Q3 2023 revenue to grow 7% to $8.5 billion, driven by growth in average paid memberships. The company projects its Q3 paid net additions to be similar to the Q2 2023 figure of 5.9 million. Further, Netflix expects its Q4 2023 revenue growth to accelerate “more substantially,” due to a rise in ad revenue and a further crackdown on password sharing between households.
What is Netflix Stock Prediction?
Earlier this week,
Baird analyst Vikram Kesavabhotla upgraded his rating on NFLX to a Buy from Hold and boosted the price target to $500 from $340, citing increased confidence in the company’s execution, primarily related to the company’s ad-supported plan and paid sharing, and a strengthening financial profile.
The analyst highlighted certain encouraging details provided by the management, including higher per-user economics being generated by the ad-supported plans compared to the basic ad-free plans globally, healthy early results from paid sharing, and the decision to remove the basic ad-free plan for new and returning users in key markets.
While the analyst acknowledged that NFLX’s valuation is “rich,” he feels his rating upgrade is justified due to the underlying momentum and unique features of the business.
Wall Street’s Moderate Buy consensus rating on Netflix is based on 19 Buys, 12 Holds, and two Sells. The average price target of $466.39 implies about 13% upside.
NFLX shares are up 41% year-to-date.
Conclusion
Wall Street is more bullish on Alphabet and Microsoft than on Netflix. Currently, the Street’s average price target indicates a slightly higher upside for Microsoft than Alphabet. Microsoft is well-positioned to drive higher revenue through its Azure business and the integration of AI into its products.
Disclosure
Roku (
NASDAQ:ROKU
) was out of favor on Wall Street for a while, but now, the company is a streaming market standout that's getting a lot of positive attention. I am bullish on ROKU stock because, even while the company is still unprofitable, Roku is keeping users on its platform and improving its financials in 2023.
Based in California, Roku sells a video streaming platform and related devices. Needless to say, Roku has to deal with fierce competition from streaming market rivals like Netflix (
NASDAQ:NFLX
). Roku probably isn't the number one choice for many streaming content consumers, so the company has had a tough time convincing analysts and investors of its value.
Roku's War on Traditional TV and Comeback Story
"Roku is growing viewers and hours, while traditional pay TV continues to erode." That's a quote from Roku's second-quarter 2023 shareholder letter, and it sums up the streaming company's ongoing battle against network and cable television.
Streaming companies may be winning that battle generally, but they also have to battle against each other in the 2020s. Hardly anyone would call Roku the biggest winner in the streaming space, and
ROKU stock has declined significantly from nearly $500 in 2021 to less than $100 now.
Anyone who short-sold ROKU shares yesterday is probably regretting it today, however. The stock is currently ~25% higher at the time of writing, and it's not difficult to figure out why traders are furiously buying the shares.
Roku’s Q2-2023 results provided clues that the company may be in the beginning stages of a huge comeback. The company's top and bottom-line results indicated an improvement while also exceeding Wall Street's expectations.
Here's the lowdown. Roku posted
revenue of $847 million, up 11% year-over-year. That's pretty good, considering the still-high inflation that persisted during the second quarter. Also, this result beat analysts' consensus revenue forecast by $72.47 million.
So far, so good. The real headline-grabber, though, was Roku's
quarterly EPS of -$0.76. Now, that might not sound great at first glance. However, it's better than Roku's year-earlier quarter EPS of -$0.82. Best of all, this result easily beat Wall Street's call for EPS of -$1.26.
There's a pattern starting to form here, as Roku's most recent quarterly EPS results have been moving closer to break-even. This isn't to suggest that Roku will necessarily be profitable in the next quarter or two, but it's a possibility, and maybe the company can at least get closer to breakeven soon.
Roku's Users are Growing and Active
Even beyond the financial stats, there's data to show that Roku's user count is increasing and, just as importantly, those users are staying on Roku's platform. Possibly, investors took notice of these data points when they bid up the ROKU share price today.
As it turned out, Roku grew its total active accounts by 1.9 million on a quarter-over-quarter basis in Q2 2023 to 73.5 million. Not only that, but Roku's total streaming hours increased by 4.4 billion hours year-over-year to 25.1 billion.
Again, Roku's press release emphasized its war against cable television. The company stated, "By the end of 2023, the number of U.S. households with cable TV packages is forecasted to be down 40% from a decade earlier (according to Statista)." If Roku can continue to gain users and keep them on its platform, this could indeed be another sign that streaming businesses are crowding out traditional television companies.
Is ROKU Stock a Buy, According to Analysts?
Turning to Wall Street, ROKU stock comes in as a Moderate Buy based on six Buys, five Holds, and two Sell ratings. The average
Roku stock price target is $72, implying 15.5% downside potential.
If you’re wondering which analyst you should follow if you want to buy and sell ROKU stock, the most accurate analyst covering the stock (on a one-year timeframe) is
Jason Helfstein of Oppenheimer, with an average return of 71.32% per rating and a 73% success rate. Click on the image below to learn more.
Conclusion: Should You Consider ROKU Stock?
I don't always lean bullish on a stock after it surges. However, Roku's results are encouraging, and the company, along with Netflix and other competitors, poses a real threat to network and cable television content providers.
Hence, Netflix stock isn't the only way to participate in the streaming market's expansion. I recommend taking a close look at Roku's excellent quarterly results and then considering a position in ROKU stock for a long-term comeback play.
Disclosure
Below is Validea's guru fundamental report for NETFLIX INC (NFLX). Of the 22 guru strategies we follow, NFLX rates highest using our Twin Momentum Investor model based on the published strategy of Dashan Huang. This momentum model looks for a combination of fundamental momentum
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