Neutral stance on NFLX; valuation seen as cheap but expecting sideways movement pre-earnings.

We see Netflix rising by 2.5 percent. So, she's outperforming the rest of the broadcasting industry this morning. But Netflix is a major focus of morning trading . I got a promotion this morning.

It seems that people are not giving up on Netflix now, given how much it has declined this year. Deutsche Bank certainly won't give it up . They upgraded Netflix's rating this morning from "hold" to "buy," and went so far as to say that the markets' obsession with what they call time spent on the streaming service in the United States actually ignores the company's overall addressable market and what they call healthier international engagement trends .

Time spent on Netflix internationally has increased year-over-year in each of the past four six-month periods. Deutsche Bank believes that this year's weakness in the United States may simply be driven by what they call less creative success.

But they say Netflix has a well-established competitive advantage and a significant edge over rivals in international production. The reason this is important is that more than 60 percent of its content is now produced outside the United States, which an analyst at Deutsche Bank says he believes will help the company maintain its global leadership.

The bank lowered its price target slightly to $95 from $100 after reducing its estimates for operating income and free cash flow, but that target still indicates an increase of approximately 37 percent.

Sam, the stock's valuation, as they say, now also provides an attractive entry point . The analyst said Netflix is trading at about 18 times Deutsche Bank's 2027 earnings estimate.

That's down from about 40 times forward earnings in June 2025 when the stock peaked. He said , and I quote: "We never thought 40x was a reasonable multiplier for Netflix given the company's slowing growth prospects."

However, at 18x, we believe that current growth prospects, which are still very healthy, are undervalued, leaving room for multiples to expand into a low-to- mid-range 20x on top of 23 percent earnings per share growth in 2027.

The analyst added that Netflix's brand scope and expertise position it to expand as a platform rather than just remaining a producer and programmer of its own shows, putting it well among other streaming companies.

He also mentioned artificial intelligence. I also found this interesting, especially as we are in the midst of a debate about the impact of artificial intelligence. He described artificial intelligence as "more of a friend than an enemy" to Netflix, and said that as a technology-based company since its inception, he believes it can actually apply AI to content production, personalization, and advertising more effectively than some of its streaming competitors.

Okay, good information. It is clear that we see it outperforming the rest of the broadcasting companies today because of that. Therefore, there is some optimism among investors regarding a rise of two and a half percent.

How would you approach a potential trading deal on this stock, which has been under significant pressure this year? Yes, good morning Sam. I am neither a friend nor an enemy of Netflix at these current levels.

I think the evaluation has definitely become cheap . The 65 level certainly represents long-term support on the charts here. Everyone is watching that, but the 75 level is the gap resulting from last quarter's earnings where the stock collapsed.

Therefore, I am using these two prices to structure the " Iron Condor" deal. I'm really looking forward to the sideways movement stabilizing here before the earnings announcement on October 20th.

I will use traditional expiry options on October 16, to sell call option spreads between 75 and 77. At the same time, I sell put option spreads between 65 and 63, making more than 40 cents according to my last observation.

So I like this 25% return on risk, and avoiding the risk of profits, which I think is essential. You want to avoid the risks of events if you can certainly do so. I am giving myself a large margin and key levels of support and resistance to rely on here.

So, I know that if the stock breaks through one of the levels strongly, I'm probably wrong and I'll close the trade. In addition, there is significant time erosion and I believe the stock will likely stabilize before the earnings announcement.

It is also unusual to get a stock upgraded from " hold" to "buy", but with a lower target price. Therefore, it wasn't a big upgrade from Deutsche Bank, to say the least, for the stock.