Netflix (NFLX) shares surged 4% in midday trading on Monday after MoffettNathanson analyst Robert Fishman upgraded the company’s stock to “Buy” from Neutral and increased his full-year price target to $1,100 from $850.
Fishman believes Netflix has won the streaming wars and will continue to grow. He credits the “Netflix flywheel,” which drives better engagement leading to more subscribers and pricing power. The analyst also sees brighter days ahead, citing a vast number of subscribers (302 million globally) that allows the company to spend more on content without affecting its ability to generate profits.
The company’s ad tier has unlocked a new runway of growth, according to Fishman. With subscription costs increased across various tiers in the US earlier this year, management said it was due to improved content quality and expected to be its most-watched Christmas Day ever in the US.
Netflix posted record-breaking revenue growth in 2024, with operating margins surging 600 basis points to nearly 27%. The company added 41 million global subscribers last year, above the previous year’s COVID-induced surge. Analysts expect its ad business to double in size this year and believe the company can raise prices due to under-earning relative to peers.
With a median price target of $1,090 a share among Wall Street analysts who cover Netflix, there is optimism for the company’s future growth.
Source: https://finance.yahoo.com/news/netflix-has-won-the-streaming-wars-moffettnathanson-upgrades-stock-to-buy-with-1100-price-target-162531263.html