Jun 8, 2022
The stock faces temporary resistance at $200.
We recommend buying Netflix as it pivots at the valuation to find a new high.
Netflix Inc. (NASDAQ:NFLX) closed at $198 last week. The week’s highest price was $203, with the lowest being $193. Netflix is retracing but faces some temporary resistance at $200. We think it will convert the $200 valuation to a support level. Then, the stock will move up and find a new resistance level at $240.
It is important to record that Netflix remains fundamentally solid. This is despite losing subscribers at the end of the last quarter. Our analysis reiterates that the market overreacted to the news about a loss of subscribers. Those actions created an opportunity for new investors to buy the company’s shares at discounted valuations.
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Netflix has an EPS of $11.29. The EPS is projected to grow by more than 17.65%. Currently, the PE is 18.62, while the PEG ratio is at 1.06. Industry peers have higher PE ratios. This indicates that the stock is still highly discounted as compared to its peers. Netflix remains a strong buy as it continues trading close to the bottom.
Netflix is gradually turning bullish
Source – TradingView
The price chart shows Netflix retracing its value gradually. The divergence between the MACD and the signal is currently at -6.11, and it is closing quickly. The RSI is at 23.19, with the coinciding SMA-14 at 25.17. As soon as the MACD and RSI cross the respective signals, investors will troop back to the stock. We think this will happen in the coming week.
Netflix is certainly a strong buy. The stock will convert the $200 resistance level to a support by the end of the coming week. Netflix will then move to find new levels at $240. That price will trigger the conventional buy signals resulting in a rally.
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