Netflix shares soared on Wednesday after Atlantic Equities upgraded the stock from Neutral to Overweight, citing upside potential in its upcoming ad-supported tier.
Atlantic Equities analyst Hamilton Faber upgraded Netflix stock to overweight (buy) from neutral (hold), while simultaneously boosting his price target to $283, up from its former level of $211. The analyst cited the debut of Netflix's upcoming ad-supported tier, which he believes "could be extremely material" for the streaming service, the benefits of which haven't yet been accurately reflected in analysts' consensus estimates. Faber estimates that Netflix could generate average revenue per user (ARPU) of $26 per month from advertising, more than three times the rate of Disney's Hulu.
As my colleague Demitri Kalogeropoulos reported yesterday, the company is launching its high-end Roku Ultra streaming player in Canada, which could boost the company's total accounts number, which currently stands at 63 million. Why is this news good for Roku? As the leading streaming aggregation platform, anything that's good for streaming is good for Roku.