Analysts on Wall Street are optimistic about Netflix’s future following the company’s strong second-quarter earnings report. The streaming service reported earnings and revenue that surpassed analyst expectations, with revenue increasing by 16% year over year. Additionally, Netflix raised its full-year revenue outlook, signaling confidence in its performance for the remainder of the year.
Despite this positive news, Netflix shares experienced a slight decline of approximately 2% in premarket trading. The company cautioned that its operating margin in the second half of the year would be lower than in the first half due to increased costs associated with content amortization and sales and marketing for a larger slate of releases. Nevertheless, the overall sentiment among analysts remains positive, leading to several price target increases.
Analyst Upgrades Following Earnings Report
Piper Sandler led the charge, raising its price target for Netflix to $1,500 from $1,400 per share. Analyst Thomas Champion noted that this new target represents an 18% upside from the stock’s closing price on Thursday. Champion described Netflix as a “defensive name with multiple upside levers,” highlighting the raised revenue guidance of approximately $1 billion for fiscal year 2025 as a sign of management’s confidence.
Morgan Stanley also increased its target to $1,500 while reaffirming its overweight rating on Netflix, which is one of the firm’s top picks. Analyst Benjamin Swinburne emphasized the potential for Netflix’s newly deployed advertising technology to significantly boost ad revenue in 2025. He also noted the company’s early adoption of generative AI tools to enhance content and product innovation.
Wells Fargo raised its target from $1,500 to $1,560, indicating a potential upside of more than 22% for Netflix stock. Analyst Steven Cahall remarked on Netflix’s evolution into a larger revenue platform as it benefits from monetizing paid sharing and expanding its advertising tiers.
Continued Optimism from Other Firms
Jefferies matched the new target set by Piper Sandler, raising its price target from $1,400 to $1,500. Analyst James Heaney expects near-term subscriber growth to stem from the crackdown on password sharing and the introduction of a new ad-supported tier. He anticipates that long-term growth will come from ongoing price increases and a robust advertising business.
UBS also increased its target from $1,450 to $1,495, maintaining a buy rating. Analyst John C. Hodulik believes that current market trends and competitive dynamics, including a reduction in content spending by competitors, will support Netflix’s ability to enhance monetization and operating leverage.
JPMorgan raised its price target from $1,230 to $1,300, while reiterating a neutral rating. Analyst Doug Anmuth attributed the increased outlook for 2025 primarily to favorable foreign exchange rates due to a weaker US dollar, as well as subscriber growth driven by popular content releases.
As Netflix continues to adapt to the evolving streaming landscape, analysts remain hopeful about its financial prospects. With its strong earnings performance and strategic adjustments, the company appears well-positioned for future growth.
