This is One of Goldman Sach's Favorite Trades for the Year

12:46 01/07/2019

Streaming giant Netflix is one of Goldman Sach's favorite trades for 2019. The firm has said it sees a nearly 50% comeback for the stock in the next 12 months and has reiterated a positive "buy" rating on shares with a $400 12 month-price target. Goldman has added Netflix to its conviction list, a list of stocks its analysts believe are more likely than others to provide susbstantial upside. The firm has called the stock one of the most compelling investments available in the internet. Analyst Heath Terry wrote, “We believe Netflix represents one of the best risk/reward propositions in the Internet sector." The analyst believes the company will double its annual content investment and have positive cash returns by the year 2022. “With Netflix shares down 36 percent since record highs in July, and the S&P 500 down 10 percent over the same period, we believe Netflix represents one of the best risk/reward propositions in the Internet sector,” Terry wrote in a note. He added, “We continue to believe Netflix’s investment in content, technology and distribution will continue to drive subscriber growth well above consensus expectations both in the U.S. and internationally.” According to Terry, Netflix has “significant” room to grow in U.S. and European markets despite relatively high levels of use in those regions. “We believe the fourth quarter will only be the beginning of the payoff from Netflix’s accelerating spend and increasingly robust Originals slate, and that consensus continues to significantly underestimate the financial impacts of these dynamics,” he also said. Shares of Netflix have lost over 25 percent in the past three months and are down over 30 percent in the past six months.

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