5 hours Ago
Wall Street analysts really liked what they saw out of Netflix's latest quarterly figures. Netflix reported fourth-quarter earnings of $4.27 per share on revenue of $10.
25 billion, exceeding LSEG estimates of $4.20 on $10.11 billion in revenue.
Netflix's paid memberships swelled by a record 19 million — with paid memberships now topping 300 million. The results sent Netflix shares surging 14% in the premarket and prompted rating changes from some analysts covering the streaming giant. Canaccord Genuity and Barclays rewarded Netflix by respectively upgrading the stock to a buy from hold rating and to an equal weight from underweight rating.
NFLX 1Y mountain NFLX char In a note, Canaccord's Maria Ripps said: "We downgraded the stock a little less than a year ago based on the view that paid sharing meaningfully pulled forward member growth, slower growth was ahead, and the premium valuation would compress. That stance clearly turned out to be incorrect, and while shares continue to trade at a healthy multiple (revenue multiple has expanded by ~3 points), the company has demonstrated clear leadership in product-market fit." Ripps also hiked her price target on the stock to $1,150 from $940, implying upside of 32%.
Meanwhile, Barclays analyst Kannan Venkateshwar noted that the "company's continued outperformance largely disproves our hypothesis on growth mean reversion and while growth will slow in '25, current operating momentum, if sustained, could drive further upside." His new price target of $900, up from $715, implies a gain of just 3.4%, however.
Analysts at JPMorgan and Morgan Stanley also lifted their price targets to $1,150. As catalysts, JPMorgan's Doug Anmuth highlighted Netflix's health double-digit revenue growth, continued operating margin expansion, strong streaming leadership position and membership base increases. Benjamin Swinburne at Morgan Stanley pointed to "a culture of innovation and track record of execution" as positives.
Goldman Sachs analyst Eric Sheridan had a more muted view on shares of Netflix. Sheridan reiterated his neutral rating and $960 price target, which corresponds to upside of over 10%. "While near-term investor debates remain centered around valuation and risk/reward from current after-hours price levels, forward operating momentum and mgmt's ability to execute on strategic initiatives, we view NFLX to be a sustained double-digit revenue compounder with room to expand margins in the coming years," he wrote.
"While we adjust our operating estimates for mgmt's forward commentary and raise our 12-month PT from $850 to $960, we maintain our Neutral rating as we still see a balanced risk/reward on the shares with robust pricing action (+30% since its last earnings report vs SPX +3%) as already reflective in that stock outperformance." Analysts overall are generally bullish on Netflix. LSEG data shows that 32 of 48 who cover the stock rate it a buy or strong buy.
Shares of Netflix have also surged 79% in the past 12 months, outpacing the S & P 500's 24.7% gain..
