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Jim Cramer: What I Would Have Called Netflix, Inc. (NFLX) Upgrade Is ‘Wrong’

Netflix, Inc. (NASDAQ:NFLX) stock gained more than 2.5% as it started trading on Tuesday. Netflix, Inc. (NASDAQ:NFLX) stock rallied following a huge upgrade from Bank of America Merrill Lynch Analyst earlier today. The most important thing to note is that the analyst in Bank of America has upgraded Netflix, Inc. (NASDAQ:NFLX) stock directly from ‘Underperform’ rating to a ‘Buy’ rating, which can be considered as a huge reversal in opinion about the stock. They have also increased their price target to more than double their original price target. Jim Cramer talked on CNBC about his take on this huge upgrade to Netflix, Inc. (NASDAQ:NFLX) stock.

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According to some reports published on Tuesday, Bank of America Merrill Lynch Analyst had upgraded the Netflix stock from ‘Underperform’ rating to a ‘Buy’ rating. They have also revised the price target on Netflix stock from their original target of $350 to $722. They also expect the streaming company to grow its international subscriber base from its current 20 million to a whopping 50 million by 2017. They also expect that the number of international subscribers will go as high as 120 million or even more in longer term. The analysts’ initial estimate of $1.96 EPS for 2016 has been revised to $4.32 EPS.

Upgrade to the stock is quite natural, but this upgrade from Bank of America on Netflix stock seems to be a huge change of mind. How can an analyst opinion about the stock change drastically overnight? Bank of America quoted the strong content growth as the main reason behind their upgrade. But what do Jim Cramer think about this upgrade?

“This was just an extraordinary reversal of how a guy feels about a stock. $722 target, it used to be $350 target. 120 million subs, whereas it was much much lower. Underestimated the impact of original content. Content is king. [..] My favorite, 2016 estimate, $1.96 goes to $4.32. What I would have called this is ‘Wrong’,” Cramer said.

Cramer feels that this is an extraordinary reversal in the Bank of America Analyst opinion on the Netflix stock. He thinks that the analyst change of mind is totally wrong.

Netflix stock though jumped by more than 2% as it started trading on Tuesday mainly due to the mind boggling upgrade and revisions from BoA analyst on the stock.

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