Netflix Stock Surges as Analysts Elevate Targets

Streaming Giant’s Q2 Beat Fuels Optimism Despite Margin Warnings

Wall Street analysts are boosting their price targets for Netflix shares following a strong second-quarter performance. The company exceeded expectations for both earnings and revenue, which saw a significant 16% year-over-year increase.

Analysts Cheer Revenue Growth and Future Outlook

The streaming behemoth not only surpassed financial projections but also raised its full-year revenue forecast. This positive momentum has led multiple financial firms to revise their outlooks upward, signaling confidence in Netflix’s strategic direction.

Netflix Q2 Earnings: Revenue Beat, EPS Beat, Subscriber Growth Solid. Analysts are raising targets across the board. pic.twitter.com/xxxxxxxxx

— World-Today-News (@WorldTodayNews) August 1, 2024

Despite a slight dip in premarket trading due to a cautionary note on second-half operating margins, the underlying sentiment remains overwhelmingly positive. Netflix cited increased content amortization and marketing expenses for a larger second-half slate as reasons for the margin prediction.

Key Firms Raise Price Targets Significantly

Several prominent financial institutions have updated their recommendations and price objectives for NFLX.

Piper Sandler Lifts Target to $1,500

Piper Sandler reiterated its “overweight” rating, increasing its price target to $1,500 per share from $1,400. Analyst **Thomas Champion** noted the company’s raised FY25 revenue guidance of approximately $1 billion as a sign of management’s confidence. Champion views Netflix as a “defensive name with multiple upside levers,” anticipating about 18% potential upside from Thursday’s closing price.

Morgan Stanley Confirms “Overweight” with $1,500 Target

Morgan Stanley maintained its “overweight” stance and set a new price target of $1,500. Analyst **Benjamin Swinburne** highlighted the promising performance of the new ad tech, which is expected to roughly double ad revenues in 2025. The firm also sees artificial intelligence as a key driver for future content and product innovation.

Wells Fargo Sees Over 22% Upside

Wells Fargo also kept an “overweight” rating, elevating its price target to $1,560 from $1,500. Analyst **Steven Cahall** pointed to Netflix’s evolution into a larger revenue platform, driven by efforts to monetize password sharing and expand its advertising tiers. Cahall expects this “flywheel” effect to continue as revenue growth fuels further investment in content and technology.

Jefferies and UBS Join the Optimism

Jefferies raised its target to $1,500 from $1,400, maintaining its “buy” rating. Analyst **James Heaney** anticipates subscriber growth from password sharing crackdowns and the ad-supported tier, with long-term growth fueled by price increases and the burgeoning ad business. Jefferies forecasts robust free cash flow margins exceeding 25% long-term.

UBS increased its target to $1,495 from $1,450, keeping a “buy” rating. Analyst **John C. Hodulik** believes secular trends and a more focused approach from competitors will support Netflix’s ability to enhance monetization and achieve operating leverage.

JPMorgan Maintains Neutral Stance

JPMorgan adjusted its price target to $1,300 from $1,230, while reiterating a “neutral” rating. Analyst **Doug Anmuth** attributed the raised 2025 outlook partly to favorable foreign exchange rates and subscriber growth. He noted that second-quarter net additions were weighted towards the end of the period, bolstered by popular content like “Squid Game” and “Ginny & Georgia.”

In a notable trend, Netflix’s subscriber growth has been bolstered by its crackdown on password sharing, a strategy that has reportedly added millions of new paying customers globally. For instance, the service’s crackdown in Canada alone is estimated to have added hundreds of thousands of new subscribers within its first few months.