Shares of Netflix (NFLX) are trading higher again on Wednesday following several days of outperformance as the streaming giant enters a busy period of premiers for new series and movies. JPMorgan analyst Doug Anmuth raised his price target on the stock to $705 as he continues to like Netflix shares toward year-end based on strength of its second half of the year content slate. On Tuesday, his peer at Atlantic Equities had increased his target on Netflix to a "Street-high" $780 given his belief that improving sentiment and confidence in long-term growth will drive material multiple expansion.
CONTENT SLATE STRENGTH: JPMorgan analyst Doug Anmuth raised the firm's price target on Netflix to $705 from $625 and reiterated an Overweight rating on the shares. The analyst continues to like Netflix shares toward year-end based on strength of its second half of the year content slate, "greater distance from pandemic pull-forward," and the "significant global secular streaming opportunity" with Netflix "only" 20%-25% penetrated. Further, he believes the company's user trends continue to improve from second quarter levels, with his analysis of quarter-to-date global downloads through August tracking to third quarter net subscriber additions of 2.7M. While this is below management's 3.5M guidance, Anmuth expects an acceleration in September, he noted.
TARGET RAISED TO 'STREET-HIGH' $780: On Tuesday, Atlantic Equities analyst Hamilton Faber raised the firm's price target on Netflix to a "Street-high" $780 from $690, while keeping an Overweight rating on the shares after increasing his 2024 subscriber estimate to 292M from 279M and introducing a 2025 estimate of 311M subscribers. The analyst forecasts Netflix to add 102M incremental subs over the next four and a half years and while his estimates are in-line with consensus, he believes improving sentiment and confidence in long-term growth will drive "material multiple expansion."
His bottom-up analysis shows that for the 102M incremental subscribers he expects Netflix to add over the next 4.5 years, Japan will be the largest contributor, followed by India and Latin America ex-Brazil. However, in terms of incremental revenue over this period, Faber sees the U.S. as the single largest contributor, followed by Japan and Brazil. This illustrates the importance of driving engagement in mature markets which should realize solid mid-single digit pricing growth over multi-year periods, the analyst added.
PRICE ACTION: In Wednesday trading, shares of Netflix have gained about 1% to $611.92. If the gains hold into the close, they will mark Netflix's ninth straight day of advance.
Netflix
+7.57 (+1.25%)