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On Wednesday, Barclays (LON:BARC) adjusted the firm's stance on Netflix (NASDAQ:NFLX) stock, upgrading it from Underweight to Equalweight with a new price target of $900, a significant increase from the previous $715. Currently trading at $869.68, InvestingPro analysis suggests the stock is slightly overvalued, though the company maintains a "GREAT" financial health score of 3.05 out of 5. The adjustment reflects a reassessment of the company's performance and future earnings potential.
Barclays cited Netflix's execution quality as the primary reason for the upgrade, acknowledging that previous expectations were conservative compared to the company's current trajectory. With impressive revenue growth of 14.8% and strong cash flows, the company's fundamentals support the positive outlook. The new price target is based on approximately 25 times the estimated 2026 EBITDA, a change from the previous target, which was based on around 26 times the estimated 2025 EBITDA.
The analyst pointed out that the revised price target implies about 30 times the estimated 2025 EBITDA. This valuation represents a substantial premium compared to the valuation multiples of Netflix's peers, such as Meta (NASDAQ:META) and Google (NASDAQ:GOOGL), which stand at approximately 15 times the estimated 2025 EBITDA. In comparison, Spotify (NYSE:SPOT) trades at 39 times with a forward CAGR of 38%, according to Barclays' estimates.
Despite the high valuation, with a current P/E ratio of 48.02, the analyst believes that Netflix's operational momentum is likely to sustain the premium. The company's growth rate, projected at an 18% EBITDA CAGR from 2024 to 2027, supports the positive outlook for the stock's performance.
For deeper insights into Netflix's valuation and growth prospects, including exclusive financial metrics and 16 additional ProTips, visit InvestingPro. The analyst's comments reflect a recognition of the potential for upside depending on the yield from price increases and the company's ability to meet or exceed the bull case expectations of $30 in EPS by 2026.
In other recent news, Netflix has been the focus of several positive analyst actions. JPMorgan has revised its price target for Netflix to $1,150, supported by the company's new $15 billion stock buyback authorization and its expected average revenue growth of 14% in 2025 and 2026. TD Cowen also raised its price target to $1,150, maintaining a Buy rating based on a positive outlook for the company's revenue and subscriber growth.
Canaccord Genuity upgraded Netflix from Hold to Buy, setting a new price target of $1,150, following impressive revenue growth and paid memberships. Furthermore, Oppenheimer raised its price target for Netflix to $1,150, citing strong margin dynamics due to conservative revenue guidance and modest price increases. KeyBanc increased its price target to $1,100, buoyed by the expectation of low double-digit percentage revenue growth and an annual earnings per share increase of over 20%.
These recent developments highlight the ongoing momentum of Netflix in the entertainment industry. The company has announced price increases for most subscription plans in select countries, a move that is included in its fiscal year 2025 guidance. Netflix's content lineup for 2025 and the expansion of its advertising tier were highlighted as key growth drivers.
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