Shares of Netflix Inc. rose Friday on expectations that its shares will get a boost from the upcoming release of its fourth-quarter results.
THE SPARK: Netflix shares have risen more than 40 percent in just the past week, prompting investors to wonder just how high they can go.
But B. Riley & Co. backed its "Buy" rating for Los Gatos, Calif.-based Netflix, saying that investors should hold on to their shares until after the company's fourth-quarter conference call on Jan. 25, when it's expected to update its outlook for the year.
THE BIG PICTURE: Netflix shares took a beating and subscribers fled after the company said in July that it would increase U.S. prices by as much as 60 percent.
Things only got worse two months later when Netflix said it would spin off its DVD-by-mail rental service into a separate website called Qwikster. It scrapped that idea in October.
Since peaking in mid-July, Netflix shares have lost about 70 percent of their value.
THE ANALYSIS: Analysts for B. Riley noted that Netflix shares are rapidly approaching the firm's $100 price target and said the company will probably post quarterly losses through at least the first half of the year.
But they also said that Netflix's customer base appears to be stabilizing, which should reassure investors that the company is holding its own against the competition.
"We continue to believe that Netflix offers consumers the greatest content variety versus price relationship of the various choices," the analysts wrote in a note to investors.
"And with the surprisingly positive announcement early last week that Netflix streamed more than 2 billion hours of movie and TV show content in the fourth quarter, we believe this is more likely to be the case than not."
In addition, the company should eventually get a boost from the expansion of its steaming services into new international markets.
THE SHARES: Up $2.32, or 2.5 percent, to $94.47 in afternoon trading.