Streaming stocks remain at the center of Wall Street's attention.
Netflix shares closed nearly 6% higher on Wednesday at $534.66 after Pivotal Research updated its price target for the stock to a new Street high of $650, citing the company's leadership in its industry, subscriber growth and strengthening spending power.
The call, which implies nearly 22% upside for Netflix from its Wednesday closing price, came in a difficult week for traditional movie theater and studio operators.
Regal Cinemas parent Cineworld announced Monday that it will temporarily close all 663 of its U.S. and U.K. theaters because of a weak slate of blockbusters that it said wouldn't be enough to attract moviegoers. Warner Bros. said the same day that it will delay releases of "Dune" and "The Batman" by one year.
"Cinemas are just a really tough space," Steve Chiavarone, a portfolio manager, equity strategist and vice president at Federated Hermes, told CNBC's "Trading Nation" on Wednesday.
"The one thing that's going for them is the studios clearly view distributing through the cinemas as so important for them in order to recoup their investments in these big tent-pole movies, these big blockbusters, that rather than go to streaming with them — movies like the [James] Bond movie and the Batman movie and some of the Disney projects — they've decided to delay the release altogether and wait until they can bring it to the big screen," he said. "So, I think it's a matter of time."
While that bodes well for theater operators longer term, they will "very likely need some support" in the near term, Chiavarone said.
"People will want to go back out, studios clearly have an interest in releasing through the cinemas and hopefully as we get through to a vaccine and additional treatment, we'll get back to that, but we're just not quite there yet," he said.
That leaves alternative plays such as Netflix, which has climbed more than 65% year to date and has traded somewhat differently from other megacap technology stocks during the pandemic-driven volatility.
Matt Maley, chief market strategist at Miller Tabak, noted in the same "Trading Nation" interview that, unlike other Big Tech names, Netflix did not peak in early September.
Instead, it "topped out initially in the middle of the summer and then sold off pretty heavily in the middle of August. Then it rallied back up to those summer highs in early September and topped out, ... kind of forming a double top," Maley said.
When the stock then reversed and broke below a trend line it had held since March, Maley got worried, predicting even more weakness if it fell further.
"However, it didn't. It got down to those August lows and held. That was very bullish," he said. "Now, it's started to trade back up. So, it's kind of a key technical level here right now."
That same trend line from March is key for Netflix, Maley said.
"If we can break above that, it's going to be positive for this stock. However, ... the really key level is going to be that double-top level from this summer at $550," he said. "If it breaks above that, it's going to get the kind of momentum that's really going to shoot it higher, and I think that $650 target that Pivotal's talking about can be reached rather quickly if we can break above that level."
Chiavarone agreed that Netflix had the potential for more upside.
"The trend towards streaming is certainly in place," he said. "We've seen a lot of the studios change their agreements where you're now going to have a shorter period of exclusivity in the cinemas before getting programs onto streaming channels. I think in general the space is well positioned. I think Netflix is the leader in that space and I think the secular trend is at their back."
Netflix has 26 buy or overweight ratings, 12 hold ratings and five sell or underweight ratings from major research firms, according to FactSet.