By Dhirendra Tripathi

Investing.com – Netflix stock (NASDAQ:) traded 2.5% higher in premarket Monday after Citi upgraded the stock to a ‘buy’ with a target of $450, 17% higher than its Friday close of $384.36.

Analyst Jason B Bazine reported that he attributed his optimism to the stock’s attractive valuation. Netflix shares have lost almost a quarter of their value since the company’s January 20 guidance that disappointed traders and other stakeholders.

It projects that 2.5 million new users will be added by March. This is significantly lower than its 4 million user additions in the first quarter. Close to 222 million people were registered as of December 31st.  

Netflix now faces growing headwinds following nearly two decades of rapid growth that was fueled in part by the pandemic. While Disney+ (NASDAQ: Discovery) and Disney+ are increasing in competition, the cost of content is rising. 

Bazine said cash flow remains high at Netflix and “the prevailing equity value offers a compelling entry point”. The fourth quarter saw an increase in free cash flow to $569million, compared with a year earlier.

Netflix CEO Reed Hastings bought 51,440 shares last week for $20 million. After the acquisition, Hastings has 5.16 million shares in a Trust. Bill Ackman, a hedge fund manager at Pershing Square Capital, has purchased over 3.1 Million Netflix shares.