Why Does Cramer Think Netflix, Inc. (NFLX) Should Not Get Upgraded Before Earning Call?

Experts are going haywire on Netflix, Inc. (NASDAQ:NFLX) ahead of its earnings call, which is scheduled to take place tomorrow after the closing bell. Netflix, Inc.’s stock has been getting upgraded by firms left, right and center. Although the company has successfully recorded positive earnings during the past four quarters and is expected to repeat the same, Jim Cramer of CNBC believes that analysts should wait until the earnings call to hear the proof about earnings rather than upgrading the stock beforehand.

Netflix, Inc. (NASDAQ:NFLX)

“I search for what the heck is going on? How could Piper Jaffray raise today? UBS was yesterday. SunTrust says Yes. Canaccord says Yes. They’re all saying you should buy Netflix. Now, what’s amazing is that Netflix is to report tomorrow. Everyone wants to be ahead of this quarter. I have never seen so many guys want to get on the bandwagon before a quarter almost as if they must believe it’s going to go up like $100. […] What I have been saying is this is a $28 billion company and if they were private and they’d go public tomorrow, they would probably value at like $40 billion. What these guys are getting ahead of is a big multiple expansion; worldwide growth. I have never seen so many guys getting ahead of the quarter,” Cramer said.

Left, right and center, Netflix, Inc. (NASDAQ:NFLX) has been getting bullish upgrades by all kinds of investment experts and analysts. Most of those have raised their price targets on Netflix, Inc. ahead of its earnings call on Wednesday. According to Cramer, analysts should not jump the gun but instead wait for Netflix, Inc. to make its earnings public.

There are two main drivers of profit margins for Netflix, Inc. One, the quality of its content and the second its focus to expand worldwide and transform itself into a home of video streaming for the entire globe. Netflix, Inc. (NASDAQ:NFLX) has shown improvement on both those fronts during the past quarter. It has more shows lined up for the current year than it has had for any years in the past.

Although Netflix, Inc. will keep making progress in both areas, it will not come cheaply and will take have heavy investment. Cramer might be right in saying that investment analysts should wait to see the company’s results of the past quarter before setting its attitude toward investments in the next one.

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