Lower Price Targets on Netflix Is a Good Thing

Shares of Netflix (NASDAQ: NFLX) moved sharply higher at Thursday's open after the streaming pioneer posted better-than-expected financial results, and you wouldn't expect that given the handful of analysts lowering their price targets in response to the otherwise well-received report. Thankfully for those long the stock, there is more to this than meets the eye.

Netflix has become the poster child for headline risk. Whenever a new service launches with aggressive pricing or a discounted prepaid plan that's locking viewers in place for a chunk of time, Netflix stock seems to suffer. When a rival platform outbids Netflix for content or pulls an iconic show from its catalog -- I'm looking at you, The Office and Friends -- the shares retreat. Several Wall Street pros slashing their price targets on Netflix stock between Wednesday night and Thursday morning may seem problematic, but sometimes the headline risk buries the lead.

Image source: Netflix.

Source Fool.com