Why Netflix, Inc. (NFLX) and Keurig Green Mountain Inc (GMCR) Are Overpriced?

Analysts draw attention to the S&P 500, where 30 stocks have estimated price targets of 3% or more below the actual values for the securities. Netflix, Inc. (NASDAQ:NFLX) with the estimate of $460 and actual of $476 and Keurig Green Mountain Inc (NASDAQ:GMCR) with $124 and $129 for estimate and real respectively, are both considered to be overpriced by around 4%, according to CNBC‘s Dominic Chu.

Netflix, Inc. (NASDAQ:NFLX)

“This [Keurig Green Mountain] is a stock that had a huge run this year. Why? Because Coca-Cola took a massive investment in the company and pushed the stock price higher […],” said Dominic Chu.

The initial deal was worth about $1.25 billion that would represent 10%, or about 16.7 million of Keurig Green Mountain Inc (NASDAQ:GMCR)’s shares. A few months later The Coca-Cola Company (NYSE:KO) raised the number of shares to be acquired to about 16% of the company’s stock, the announcement boosting the prices of both companies’ stocks, the major gainer being Keurig Green Mountain Inc (NASDAQ:GMCR) with a gain of around 80% since the beginning of 2014.

Netflix, Inc. (NASDAQ:NFLX) showed pretty much a similar pattern as the example above in terms of pricing, but being in the technology sector, it had no need of a greater investor to uplift its price. With a market capitalization of almost $28.5 billion and a price-to-earnings of 143.35, the company might be showing some signs of overvaluation, compared to other players in the same industry. However, discussions of it being overpriced date from last year, some of which as early as January, thus it is difficult to tell how much more time will pass until analysts’ and exchange markets’ opinions will converge to one value.

The worst performer in the S&P 500 is Staples, Inc. (NASDAQ:SPLS), which is a large office supply chain store, now offering 3D-printing experiences, with an expected price of $11, below 14% the current about $12.5.  


Disclosure: none