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$ 1 reason to continue buying Netflix, one of S & P's hottest stocks



There has been some fist among Netflix faithful this week, when the video streamer's "Rome" passed away with several honors on Hollywood's Oscar.

While the critics' favorite was not the best picture, some say it's just a matter of time before the actual here-and-now company grabs this top prize and breaks the doors of an old industry.

However, investors have had little to complain about given red-hot shares in Netflix

NFLX, + 0.25%

up 32% so far this year and the second best winner at S & P 500, just behind GE

GE, + 6.39%

. To be sure, someone out there has heightened disease given the upward path in this market, and sizzling performances by companies like Netflix.

But wipe your sweat off your forehead. Our Day Call by Piper Jaffray Research Analysts Michael Olson and Yung Kim offer a $ 1

reason to continue believing and buying streaming giant.

As you will remember earlier this year, the company announced that it increased subscription rates by between 13% and 15% for 58 million US subscribers, increasing the cost of the most popular plan to $ 13 from $ 11.

Piper surveyed 1,100 international Netflix subscribers, and found 50% would be willing to pay more than $ 1 per month more for the service. "A $ 1 / mo increase in international ASP (average selling price) would have a dramatic effect on our 2020 estimates, all the same," they said.

Crunching the numbers, they say that lifting could mean 40% upside for stocks over $ 500 even though only half of the earnings per share rose. They scored an overweight rating and a price target of $ 440. (By the way, they also believe the other 50% who said they would not pay more, would probably eventually pay if the push is going to push.)

Read: When investors make mistakes, this boss must pounces and profits

Netflix shares stopped at $ 363.91 on Monday, of course, there are some ways to go if Piper's goals are absolutely correct. Of course, some concerns that it takes a gamble, consider competitors like Hulu responded fairly quickly at an additional cost. Analysts said they would look at more negative setbacks from US subscribers, where numbers grew in the last reporting quarter, but it was before the announcement of the price hike.

Netflix is ​​a core element of the FAANG gang, which includes Facebook

FB, + 1.69%

Amazon

AMZN, + 0.09%

Apple

AAPL, + 0.73%

and Google parent alphabet

GOOGL, + 0.07%

far ahead of the package over the past year when it comes to sharing winnings.

Opinion: How a new crop of technological IPOS can steal emotions from FAANG shares

The market

Some steam seems to come out of the market as euphoria disappears and investors give up for data and comments from Fed Mayor Jerome Powell, who heads Capitol Hill. Dow

YMH9, -0.33%

S & P 500

ESH9, -0.17%

and Nasdaq

NQH9, -0.31%

futures are lower, after Monday's action, which saw Dow

DJIA, + 0.23%

S & P 500

SPX, + 0.12%

and Nasdaq

COMP, + 0.36%

all squeak off with gains.

Urent

CLJ9, + 0.38%

trying to recover some of Monday's losses while gold

GCJ9, -0.29%

is down and the dollar

DXY, -0.08%

are softer, largely against the yen

USDJPY, -0.17%

and pound

GBPUSD, + 0.6566%

floating on Brexit headlines.

Read: As Brexit watch runs, the pound is only priced for a "soft" split

Asia shares withdrawn and even China

SHCOMP, -0.67%

gave up gains. Europe shares

SXXP, -0.12%

is mostly down.

The Economy

There is a large week in data with some reports to be released after being held up by the last closure. For Tuesday we have housing start, building permits, Case-Shiller housing prices, consumer confidence and new home sales.

At 9:45 pm, Fed Chairman Powell will appear in front of Congress members where he should be welcomed with open arms for the bad politician.

Read: Yellen says that POTUS has no understanding of macroeconomic policy

Map

"A little or no upside." It's a bit cheerful, but it's strategist Barry Bannister at broker Stifel Nicolaus thinking of the S&P 500 right now. Our chart of the day comes from a party he sent to clients who post it.

As Bannister explains, S & P can't go much higher because it's not going to get much help from the revenue department – the price-to-profit relationship between companies is capped by positive real interest rates, and earnings are falling sharply.

"The real fed funds [rate] is 0.6%, which implies an S & P 500 demand, 12 months p / e [ratio] of 17 times," he said, adding that they see 2019 EPS on $ 162 plus 5% year-over-year against Wall Street expectations of around $ 167. Crush everything and he says the S & P 500 looks fully priced at around 2,750, which is equal to 17 times their EPS forecast for this year at $ 162.


The S & P 500 has probably been hitting a key resistance level of 2,800, which it tapped for the first time since the beginning of November on Monday, but was shut down.

Buzz

Tesla

TSLA,

+ 1.38%

takes a fight after a judge commissioned CEO Elon Musk to be disdained by the court over a tweet he sent in mid-February, specifying production speeds as drives ire by SEC. In true Musk fashion, he aimed to get the last word: "SEC forgot to read Tesla's income statement, which clearly says 350k to 500k. How embarrassing …"

Home Depot

HD, -1.25%

down on results while AutoZone

AZO, -2.42%

is on a earnings strike. Macys

M, + 1.25%

will also report with Mylan

MYL, -0.93%

due after the end.

Home Depot and Lowe's earnings: Same-store sales complicated by closure, please

Reporting late Monday was Etsy

ETSY, + 4.13%

Mosaic

MOS, + 1.46%

and Hertz

HTZ, + 2.77%

whose shares are up for positive results. Shake Shack

SHAK, -1.21%

Tenet Healthcare

THC, + 0.25%

also reported.

Opinion: Why buy Walmart shares over Amazon is a better bet now

As auto-trading tensions simmer between the United States and Europe, Peugeot says it's back to Stateside after a long absence . [19659002] It's not just Powell who has led to D.C. Today, CEOs from major drug companies like AstraZeneca

AZN, + 1.37%

AZN, -1.72%

Bristol-Myers Squibb

BMY, -0.65%

Merck

MRK, -0.48%

and Pfizer


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