Netflix, Inc. (NASDAQ:NFLX) offers a great value for investors who may be looking at the entertainment content production and distribution company as an investment.
That’s according to Jim Cramer in an analysis on CNBC’s Mad Money where the host revealed that he thinks Tesla Motors Inc (NASDAQ:TSLA), Amazon.com, Inc. (NASDAQ:AMZN) and Netflix, Inc. (NASDAQ:NFLX) are the most loved stocks on Wall Street today.
Cramer started his discussion about Netflix, Inc. (NASDAQ:NFLX) by noting Bank of America Merrill Lynch’s upgrade of the stock directly from Sell to Buy. It is one of the most amazing reversals he has ever seen, Cramer says.
“Here’s an analyst that has simply been dead wrong about Netflix and obviously had no idea what to do about it other than to capitulate as abjectly as possible. He chose to go down in flames by raising his price target from $350 up to $722. Remember Netflix is a $565 stock. The analyst, who remains nameless to protect his sanity, took his earnings estimate from $1.96 for 2016 up to $4.32,” Cramer explains.
According to the analyst, better-than-expected growth in both domestic and overseas subscriptions in the first quarter of 2015, as well as “AAA” content, have “all but destroyed our thesis.”
Cramer says that in other words, Netflix, Inc. (NASDAQ:NFLX) management did a much better job than the Bank of America Merrill Lynch’s analyst expected
The CNBC host says that this should serve as a great reminder to people at home that companies can and do change and that those who believe companies can’t will be downright foolish in their heels. He admits that he himself has seen stocks go higher, much higher, than he ever thought they could go which is why he encourages people to change their minds when the facts change.
Nonetheless, he did acknowledge that at least the analyst did the right thing and admitted that he couldn’t stay negative any longer.
“I’ve liked Netflix for ages simply because I believed that the company’s worth a heck of a lot more than it’s selling for since it has become the de facto online television network for people around the world – the beloved category winner with the ridiculously low price point if you want to become a member. With this current $34 billion market gap, I think it is still not valued as highly as it could go,” Cramer says.
He adds by the end of the segment that “Netflix reflects real value,” different from Tesla which Cramer seems to suggest people should avoid betting on or betting against.
Carl Icahn’s Icahn Capital LP owned about 1.41 million Netflix, Inc. (NASDAQ:NFLX) shares by the end of the last three month period of 2014.
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