SunTrust says Netflix (NASDAQ: NFLX) shares will rise due to its success in international markets.
The firm raised it rating for Netflix shares to buy from hold, saying its web search trend analysis is pointing to strong subscriber results for the company's third quarter.
"The stock pullback post the 2Q subs miss (which we attribute to '13 Reasons Why' and World Cup, as previewed) leaves us with ~20% potential upside from current levels," analyst Matthew Thornton said in a note to clients Thursday.
Thornton lowered his price target for Netflix shares to $410 from $415, representing 21% upside to Thursday's close.
In its second-quarter financial results last month, the company said it added 5.15 million memberships, missing the Wall Street consensus of 6.34 million. As a result, Netflix shares are down 13% since the end of June. Those shares opened Friday up $9.01, or 2.7%, to $348.18
Earlier this week, the company announced it was joining the likes of Epic Games and Spotify (NYSE: SPOT) to test a method for users to register and pay for the streaming service while bypassing Apple’s app store, and with it, the hefty commission fees.
Both Apple (NASDAQ: AAPL) and Google (NASDAQ: GOOGL) take a 30% commission on all apps and in-app purchases, the commission dropping to 15% after the first year.
Specifically, Netflix is conducting this experiment in 33 countries, disabling the option to pay through Apple's services for certain "new or lapsed subscribers in selected markets across Europe, Latin America and Asia" until September 30.
