Netflix Price Target Cut Again. Why the Stock Is Rising.

Netflix stock has slumped in recent days, with investors fretting about the streamer’s deal to acquire Warner Bros. (Mario Tama/Getty Images)

Key Points

• Netflix stock rose 1.5%, ending a six-day losing streak despite an analyst’s price target cut.
• Seaport Research Partners reduced Netflix’s price target to $115 from $138 due to uncertainty over the Warner Bros. Discovery acquisition.
• Netflix’s stock has declined 15% since last Wednesday, marking its worst six-day performance since May 2022.

Netflix stock was rising in Thursday’s trading, putting the streamer on course to snap a six-day losing streak even after another analyst cut his price target on the shares.

Netflix stock climbed 1.5% on Thursday, closing at $94.09. The S&P 500 rose 0.2%, after higher spending guidance from software developer Oracle reignited fears of an artificial-intelligence bubble.

The move came even though Seaport Research Partners analyst David Joyce cut his price target for Netflix to $115 from $138, citing ongoing uncertainty about its deal to acquire the streaming and studios assets of Warner Bros. Discovery .

Following months of speculation, Netflix struck a deal on Friday to buy Warner Bros. for $27.75 a share, with cable being spun out to investors. Paramount Skydance responded on Monday by going direct to investors with a hostile bid to buy all of Warner Discovery for $30 a share.

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Netflix stock has taken a hit. It’s down 15% since last Wednesday, for its worst six-day run since May 2022, according to Dow Jones Market Data.

Joyce, who still rates Netflix at Buy, wrote that the recent selloff was “overdone,” but noted the deal “has introduced the notion of investors needing to reassess the long-term growth trajectory for NFLX and the appropriate multiple that should be applied.” Shares are now fetching 31 times future earnings, down from about 44 times on June 30.

Joyce set his new price target by assuming Netflix will reclaim about half of the gap between the two multiples. The new target implies shares can climb about 22% from their current level.

Barron’s recommended buying Netflix in May and stood by that call on Wednesday, noting that shares looked more attractive at their current valuation.

The stock has caught downgrades since the deal was announced, though, amid worries that Netflix will have to take on more debt to fund the acquisition.

Pivotal Research Group analyst Jeffrey Wlodarczak cut his rating to Hold from Buy on Monday, warning that the “extremely expensive” deal was “an $83 billion admission of long-term headwinds,” including the threat posed by short-form video apps such as TikTok.

Write to George Glover at george.glover@dowjones.com