Investors shouldn’t be too worried about Netflix’s (NASDAQ: NFLX) recent slowdown in viewer engagement, according to Wolfe Research.

In fact, the firm believes the streaming company’s stock could be ready for a rebound as stronger content and live programming help bring viewers back. At the moment, Wolfe Research has an outperform rating on Netflix and recently raised its price target to $95 from $84, adding that weaker second-quarter engagement was mostly caused by the timing of new content releases, rather than a major problem with Netflix’s business.

“After analyzing millions of data points from Netflix’s viewing history,” the firm said the timing of content releases was largely responsible for the weaker second-quarter results. He also believes Netflix has a stronger lineup coming in the third quarter and that its growing focus on live programming is starting to pay off, as noted by CNBC.

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Netflix’s Recent Results Disappointed Investors

Netflix reported its second-quarter results in July. 

The company’s financial results were mostly in line with Wall Street expectations. However, Netflix lowered its full-year revenue outlook to between $51 billion and $51.4 billion. Its previous forecast was between $50.7 billion and $51.7 billion. The updated forecast worried investors. Another major concern for investors is whether Netflix can continue attracting and keeping customers as competition in the streaming industry grows. 

Consumers now have many streaming services to choose from, making it harder for Netflix to stand out and keep people subscribed.

Netflix has also raised its subscription prices, which could make some customers reconsider whether the service is worth the cost. Another challenge is that Netflix stopped reporting quarterly subscriber numbers last year. Subscriber growth was once one of the most important numbers investors watched after each earnings report.

Without that information, investors now have to look at other signs of the company’s health, including revenue, viewing activity, and customer engagement.

Wolfe Research believes those concerns may be overblown. 

Sincerely,

Ian Cooper