What happened Shares of Netflix (NASDAQ: NFLX) jumped on Tuesday following some positive analyst commentary. This move higher comes one day after Netflix stock suffered a steep drop, dragged lower by a market worried about an escalating trade war. At 3:35 p.m. EDT, Netflix stock was up about 4.1%. It was up as much as 5.3% earlier in the day. So what Analyst David Miller from Imperial Capital initiated coverage of Netflix on Wednesday with an "outperform" rating. Miller slapped a $503 price target on the stock, the highest so far. The stock currently sits right around $400 per share. Image source: Netflix. The reasoning behind the lofty price target involves pricing and operating leverage. Miller noted that Netflix's basic package, which does not include high-definition picture quality, is priced at just $7.99, lower than Amazon's video offering despite having more content. This implies that Netflix may be able to raise prices in the future without losing very many subscribers. Miller also expects Netflix to be able to rein in its marketing and development spending, leading to operating leverage this year. Now what Netflix is an expensive stock, trading for hundreds of times earnings. The company expects its free cash flow to be a loss of between $3 billion and $4 billion this year as its debt-fueled content spending binge continues. The current stock price already reflects an awful lot of optimism, but Miller's price target goes well beyond that. Could Netflix soar to $500 per share? Sure. But that move certainly wouldn't be based on the fundamentals. 10 stocks we like better than NetflixWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.* David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Netflix wasn't one of them! That's right -- they think these 10 stocks are even better buys. Click here to learn about these picks! *Stock Advisor returns as of June 4, 2018John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Timothy Green has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends AMZN and Netflix. The Motley Fool has a disclosure policy.