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NFLX Earnings Monday, Target $130?

|Includes: Netflix, Inc. (NFLX)

Netflix is due to report earnings after the close on Monday, April 18. There is strong Demand ahead of earnings and our overall grade for the stock just popped. Our computer report shows an 11% implied 12-month return and a technical buy signal.

Here is the chart showing our Demand reading and overall grade for the stock at the bottom of the chart. Unlike all the other technical signals on the chart, our SID grade includes fundamentals and technicals.

http://photos4.meetupstatic.com/photos/event/d/9/9/2/highres_448975698.jpeg

At the bottom of the chart you can see the big improvement in Demand that has taken price back above the 200-day moving average. Demand has a D-7 reading where the highest reading is 9, therefore it is overbought.

Our SID grade is showing a big improvement just before earnings. It is still a failing grade of 55 below the red line because it is an overvalued, high risk, aggressive growth stock and our SID grade will never be very high for this type of stock. But the big improvement in grade is a positive signal.

The consensus analyst target is 130 with some big name analysts higher. There are a couple of negative analysts. Either that consensus target has to go much higher or price has to come down to justify the risk in owning this stock.

CONCLUSION -

I am looking for a little pop after earnings to 115 and Demand could move up from 7 to 9. Beyond earnings I see a pullback from this overbought Demand 7 level to test the 200-day and 50-day moving averages. I don't think it goes to $130 here and the closer we move to $130 then the closer we come to a pullback in price. For a stock like this the implied return needs to be much higher than 11%. That happens by increasing the target and decreasing the price in this case.

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