Netflix Inc. (NASDAQ: NASDAQ:NFLX) saw its price target increase to $780 from the previous $625 by Bernstein, while the firm retained a Market Perform rating on the stock.
The adjustment came after the company reported its third-quarter results, which sparked some concerns due to a lower-than-expected number of new subscribers, particularly in the Latin American region. Despite these initial worries, the outlook provided by Netflix for the coming months has been viewed positively.
The streaming giant's third-quarter performance was notably affected by a weaker content lineup and the impact of paid-sharing efforts. However, the analyst from Bernstein indicated that the worst fears regarding subscriber growth have subsided.
The company's forward-looking statements have been deemed encouraging, with expectations of a stronger content offering in the fourth quarter. This includes the addition of NFL games and the highly anticipated return of the series "Squid Games."
Netflix's guidance for approximately 11-13% revenue growth in 2025 is being driven by anticipated subscriber growth. The company also projects continued operating margin expansion, aiming for a conservative 28%. This financial outlook reflects Netflix's strategic plans and the steps it's taking to grow and solidify its market position.
Furthermore, the adoption of the advertiser-supported video-on-demand (AVOD) model is progressing, with expectations that it will be ready to compete at a higher level by 2026. The introduction of this model is part of Netflix's broader strategy to diversify its revenue streams and offer more flexible viewing options to its audience.
In other recent news, Netflix's financial performance has been noteworthy, with several firms adjusting their price targets. BMO Capital raised its price target to $825, citing potential revenue growth and advertising revenue prospects. The firm's analyst anticipates higher-than-expected revenue growth in 2025, backed by a 10% advertising revenue mix and a planned $18 billion content expenditure.
Phillip Securities, however, adjusted their rating from Buy to Neutral, while increasing the price target to $695. This change follows Netflix's third-quarter results, which revealed revenue slightly above estimates and a profit exceeding expectations due to strong growth and favorable timing of content expenditure.
On the other hand, Evercore ISI increased its price target to $775, maintaining its Outperform rating. The firm highlighted Netflix's record high Operating Margin of 30% and strong Q4 outlook. The firm also pointed out selective price increases by Netflix, hinting at possible future price hikes.
UBS also increased its price target to $825, retaining a Buy rating. The firm highlighted Netflix's strong subscriber growth and revenue increase in Q3, with expectations of a sequential rise in net subscriber additions in Q4.
InvestingPro Insights
Netflix's recent financial performance and strategic initiatives align with several key metrics and insights from InvestingPro. The company's market capitalization stands at an impressive $295.12 billion, reflecting its dominant position in the streaming industry. This aligns with the InvestingPro Tip that Netflix is a "prominent player in the Entertainment industry."
The company's revenue growth of 13.0% over the last twelve months and 16.76% in the most recent quarter supports Netflix's guidance of 11-13% revenue growth for 2025. Additionally, the strong EBITDA growth of 50.33% over the last twelve months indicates improving profitability, which is consistent with the company's projection of continued operating margin expansion.
InvestingPro Tips also highlight that Netflix is "trading at a low P/E ratio relative to near-term earnings growth," with a PEG ratio of 0.59. This suggests that the stock may be undervalued relative to its growth prospects, potentially supporting Bernstein's increased price target.
For investors seeking a more comprehensive analysis, InvestingPro offers 14 additional tips for Netflix, providing a deeper understanding of the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.