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CFRA downgrades Netflix to sell after nearly 40% runup from mid-July low

Shares of Netflix are poised to take a breather in the coming months after surging nearly 40% from the mid-July low, according to CFRA. The firm downgraded the streaming service to sell from hold and lowered its price target to $238 from $245. That’s slightly lower than the stock’s closing price on Friday. Given the stock’s performance from mid-July, CFRA sees shares underperforming the S & P 500 for the rest of the year. Netflix shares are up 38% in that time. “NFLX is no longer a growth stock,” said analyst Kenneth Leon. He also cut his earnings per share and revenue estimates for the company in the second half of the year, citing slowing operating and free cash flow. “The key catalyst for NFLX — introducing new ad-pay subscription plans — may not be visible until 2023. This could renew subscriber growth (from 220.7m at June 30), which has been flat to lower in 2022,” he wrote. “NFLX is guiding 1.0m more subscribers in Q3 2022 to a net 221.6m at quarter end.” In addition, Netflix is facing macro headwinds inflation and lower discretionary consumer spending going forward, Leon said. –CNBC’s Michael Bloom contributed to this report.

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