Morgan Stanley Picks Netflix as Top Stock, Sees 22% Gain

Morgan Stanley has identified Netflix (NFLX.US) as its top stock pick, asserting that the streaming giant is well-equipped to navigate current market challenges. The firm anticipates that Netflix will exhibit relative resilience amidst a global economic slowdown. Morgan Stanley has reaffirmed its "outperform" rating on Netflix, setting a target price of $1,150, which indicates a nearly 22% increase from the stock's closing price on Wednesday.

Analysts at Morgan Stanley see the recent decline in Netflix's stock price as a buying opportunity. The firm underscores that Netflix's core subscription business is demonstrating strong momentum, with members averaging nearly two hours of viewing per day. This trend, according to the analysts, mitigates the company's overall risk even if the advertising market encounters difficulties due to escalating trade tensions.

Moreover, Morgan Stanley points out that Netflix operates beyond the United States, having previously managed rising production costs and streaming taxes. The analysts suggest that the company typically transfers these increased costs to consumers. This approach, coupled with Netflix's robust subscriber base and extensive content library, positions the company to sustain its competitive advantage despite macroeconomic headwinds.