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Bernstein analyst Todd Juenger doesn’t expect Netflix to aggressively raise prices this year—and expects that will be good for its shares.
Last year was a roller-coaster ride for Netflix (ticker: NFLX) shareholders. The stock was up as much as 44% for the year in early May, but fell hard in the summer when the company missed subscriber estimates. In recent months, it has rebounded off its low and closed up 21% for 2019.
On Tuesday, Juenger reaffirmed his Outperform rating for Netflix stock. He has a $422 price target for the shares.
“We think Netflix is unlikely to raise pricing in most of North America, Western Europe, or Latin America during calendar 2020,” he wrote. “That leads to a reasonably logical bullish theory on Netflix subs in 2020, especially 1H: this year won’t face the same price-related churn and gross demand suppression as last year.”
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The analyst said his firm tracked the pricing for Netflix subscriptions in more than 50 countries and found only one—Australia—in which the streaming company raised pricing last month. He added they found Netflix is testing discounted longer-term subscription plans from three to 12 months in India.
Other Wall Street analysts are generally positive on Netflix. About 63% of them have ratings of Buy or the equivalent on the stock, while 26% have Hold ratings, according to FactSet.
Earlier this month, Barron’s suggested Netflix may have a difficult time raising pricing over time due to the launches of new lower-priced streaming competitors such as Walt Disney’s (DIS) Disney+ and Apple’s (AAPL) Apple TV+.
Netflix stock was down 0.8%, at $336.25, in recent trading. The S&P 500 index was down 0.2%.
Write to Tae Kim at tae.kim@barrons.com