Naifei has another explosive TV series! Analyst: Target price $500

"Suits" is the blockbuster of this summer, which is good news for Netflix as it seems to be able to withstand the strike that has caused a stagnation in Hollywood.

The show has dominated the summer streaming charts, holding the top spot for six consecutive weeks and surpassing the second highest-rated show by nearly 3 to 1 in terms of minutes watched.

No one can give a good answer as to why "Suits" has become the big winner this summer, but it is a blessing for Netflix and has caused a sensation for some reason.

Why could Netflix be the winner?

Loop Capital analyst Alan Gould pointed out that "Suits" had already been available on Amazon Prime Video and Peacock before it came to Netflix.

He explained, "This is not the first show to skyrocket in popularity on Netflix, which in our view demonstrates the quality of Netflix's user interface and the power of its network." "Interestingly, 'Suits' is not an original or exclusive show, so it may not be expensive either."

Richard Greenfield, an analyst at LightShed Partners, pointed out that due to the significant differences between writers, actors, and production companies, the strike is unlikely to end until early 2024 at the earliest.

Greenfield said, "The strike is driving consumers to seek other forms of entertainment, such as YouTube, TikTok, and video games, which is negative for both sides."

But Netflix has the potential to win, at least on a relative basis. As demonstrated by "Suits," Netflix has the ability to keep people using the platform even without new shows.

Target price of $500

On August 25th, Gould upgraded Netflix from Hold to Buy with a target price of $500. He pointed out that Netflix has a large number of unreleased movies and shows, while other companies suffer from a lack of content.

Gould wrote, "The strike will accelerate the decline of traditional TV business, benefiting streaming media, and the leader Netflix will obviously benefit from it."

Of course, the longer the strike lasts, the greater the impact on Netflix, which concerns Baird analyst Vikram Kesavabhotla. Ultimately, the lack of new content will lead people to question why they are paying, especially if it's all old shows.

Kesavabhotla upgraded Netflix to Buy in July, writing, "We are encouraged by our view that Netflix is relatively better positioned to address these challenges in the short term, but we recognize that the progress of the strike needs to be closely monitored."

Nevertheless, the stock still appears to be a reasonable buying choice. Although Netflix's stock price has risen 47% year-to-date, it is still 37% lower than its all-time high of $691.69 on November 17, 2021, and has been consolidating for most of the past two months. $500 seems like a reasonable target.