Netflix Stock Earns Upgrade From Longtime Wall Street Bear: “Hell Freezes Over”

deadline.com:

One of the most stubborn (by his own admission) Netflix bears, Wedbush Securities analyst Michael Pachter, has issued a landmark upgrade on the streaming giant’s stock.While he still doesn’t consider it a clear “buy,” Pachter raised his rating to “neutral” from “underperform,” with a 12-month price target of $342.

Amid widespread gains today for many stocks, Netflix shares were up 4% in early trading, at $356.71.Acknowledging the momentousness of the change in the title of his note to clients — “Hell Freezes Over” — Pachter didn’t offer any hosannas or describe any sort of epiphany.

Rather, he merely conceded that the company does actually have something of an edge in the streaming contest. “Netflix’s first mover advantage and large subscriber base provides the company with a nearly insurmountable competitive advantage over its streaming peers,” the analyst wrote.For more than a decade, Pachter had recommended that clients sell Netflix shares, costing them a roughly 1,700% return over that span.

In an article in Bloomberg last year, the analyst gamely conceded the inaccuracy of his call in November 2011 urging investors to dump the stock, which he predicted would fall to $6. “I never thought they’d get to 200 million subscribers,” he told the news outlet. “I thought they were close to saturated in the U.S. … They just keep adding people.”Despite the upgrade, Pachter still sees a significant vulnerability in Netflix’s adherence to the binge-release pattern for its series.