Netflix leads S&P 500 gainers on upgrade

Netflix, was the best performing stock in the S&P 500 index on Monday, after the online-streaming service provider received a second analyst upgrade in as many trading days.

Analysts at UBS upgraded the stock to "buy" from "neutral" raising their price target to $565, from $370 as they believe the company's international subscribers will continue to accelerate.

"We have increased confidence that current 10 per cent international penetrations should about double by 2020, despite finding continued softness in Germany and France, as all other markets are trending consistently," said Doug Mitchelson, analyst at UBS. He also expected international profits to surpass US profits by 2020.

Analysts who take a less optimistic view on the stock have raised concerns that over-the-top television launches, such as HBO Now, increase competition for viewers and consumer dollars at the Los Gatos, California-based company.

Mr Mitchelson, however, doesn't think these launches will hurt the company because in the longer term, it could drive "cord cutting and expand the market'' as viewers cancel cable television services and watch shows via online providers.

The UBS ratings action comes after analysts at Citi upgraded the stock on Friday, bring the number of brokerages covering the stock with a "buy" or higher rating to 24.

Netflix shares, which have gained 46 per cent in the past year, rose 5 per cent to $476.98.

Shares of JetBlue Airways rallied after the company reported a 9.2 per cent year-on-year rise in March traffic and a near 8 per cent rise in passenger revenue per available seat mile (PRASM), a key industry metric, according to preliminary figures.

The company added that it now expected a 4.5 per cent year-on-year rise in PRASM in the first quarter, up from its previous guidance of 3-4 per cent.

Helane Becker, analyst at Cowen & Co, said: "We believe this was driven by broad strength in the domestic market." She added: "The March quarter also benefited from the earlier Easter and Passover holidays that pulled forward stronger demand from April. This will negatively affect April to the same degree."

JetBlue shares gained nearly 6 per cent to $20.11. The news also buoyed other airline stocks. Shares of United Continental advanced 1.3 per cent to $61.85, while shares of American Airlines climbed 1.6 per cent to $48.48.

Shares of Clovis Oncology, the US cancer drug company, gained 15 per cent to $88.90, after analysts at Goldman Sachs upgraded the stock to "buy" from "neutral" and raised the price target to $117 from $68.

Analysts said they now expect adjusted peak sales of $2bn for the company's main pipeline lung cancer drug, Rociletinib, up from their previous estimates for $1.5bn. They also said they "now see higher probability of M&A".

The Nasdaq Composite crossed back above the 5,000 mark driven by a rally in technology stocks and gained 0.4 per cent to 5,013.94.

The broader S&P 500 benchmark index, however, struggled to find a footing as the first-quarter earnings season gets under way. The S&P 500 was little changed at 2,102.23, while the Dow Jones Industrial Average was flat at 18,064.26.

[email protected]

Twitter: @mamtabadkar

© The Financial Times Limited 2015. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation