Netflix Inc. (NASDAQ: NFLX) reported its first-quarter results Tuesday after the market close, and investors were not happy. Shares dipped over 10% in the after-hours session, and many of the bears were calling for more. Despite this carnage, one analyst actually had a positive takeaway from the earnings report and is bullish on where the stock could go from here.

Stifel upgraded Netflix to a Buy rating from Hold and raised its price target to $560 from $550, implying upside of 10% from Wednesday’s opening price of $508.00. The brokerage firm believes that Netflix is a globally dominant company in media distribution that it should experience mid-teens intermediate-term revenue growth with rising operating margins and significant free cash flow generation.

Essentially, Stifel has been waiting for Netflix to have the quarter in which the pull forward became evident, and the first-quarter results served as that moment. The firm expects a three to nine month period of working through the remaining COVID-19 comp issues, followed by a multiyear period in which the stock can compound at a rate consistent with revenue growth or about 15% per year, allowing for some multiple compression given rising operating margins.

In terms of results, Netflix added over 4 million global net paid subscribers in the first quarter, below Stifel’s estimate of 6.1 million and the company’s guidance of 6.0 million. Management noted that viewing and engagement per household was up year over year, and that subscriber churn in most markets has fallen below the pre-price increases in late 2020 and early 2021.

Revenue for the quarter grew 24% year over year to $7.163 billion, which was in line with guidance of $7.129 billion and Stifel’s $7.127 billion forecast. It was driven by paid subscriber growth of approximately 13.6% and increased average revenue per user of over 6%.

Looking ahead to the second half of 2021, here’s what Stifel expects:

Paid net additions should re-accelerate in 2H:21 as the company moves towards a strong slate content with new seasons of hit shows such as Sex Education, The Witcher, Money Heist, and You, and new original films including The Kissing Booth 3, Red Notice, and Don’t Look Up. We expect continued focus on local language programming efforts, including several notable upcoming titles for the LATAM and APAC regions, to support new subscriber growth. The company expects over $17B of cash content spend in 2021 (versus the previous range of $17B-$18B); content spend should continue to increase in 2H:21 to support 1P investments and potentially acquisitions. Content spend growth is expected to slow next year as comparisons normalize.

Excluding Wednesday’s move, Netflix stock had underperformed the broad markets with a gain of over 1% year to date. In the past 52 weeks, the share price was up closer to 26%.

Netflix stock traded down nearly 8% Wednesday morning, at $506.50 in a 52-week range of $393.60 to $593.29. The consensus price target is $622.74.

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