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On Tuesday, JPMorgan reiterated its Overweight rating and $1,150.00 price target on Netflix (NASDAQ:NFLX) stock, highlighting the company’s strong performance amid market uncertainties. Netflix shares have surged 30% above post-tariff lows, outpacing the S&P 500’s 15% gain. The firm’s analyst pointed to Netflix’s defensive subscription model and streaming dominance as key drivers of this growth, despite potential near-term shifts in investor focus due to trade relief.
In anticipation of Netflix’s Upfronts this week, JPMorgan expects the company to update its Ad Tier Monthly Active Users (MAUs), likely surpassing 100 million. Further expansion of the Netflix Ads Suite internationally, currently available in the U.S. and Canada, is also anticipated. InvestingPro analysis reveals the company maintains a strong financial health score of "GREAT" and a perfect Piotroski Score of 9, indicating robust operational efficiency. Key Live/Sports content announcements are on the horizon, including international rights to WWE Raw, a Taylor vs. Serrano boxing rematch scheduled for July 11, two Christmas Day NFL games, and potentially more.
JPMorgan remains bullish on Netflix’s growing Ad Tier scale, projecting Ad Tier subscribers to reach over 60 million by the end of 2025, which would correspond to more than 140 million MAUs. With the company now focusing on monetization after achieving scale, advertising revenue (excluding subscription) is projected to more than double from $1.4 billion in 2024 to $3.0 billion in 2025.
Despite discussions on potential tariff implementation on films produced outside the U.S., the financial impact remains uncertain. Netflix’s global production footprint spans over 50 countries, and it’s suggested that over half of its content is produced internationally. Nevertheless, Netflix’s contributions to the U.S. economy are significant, with over 9,000 full-time employees, millions of square feet of corporate and studio space, and 60 soundstages across the country.
The firm’s positive outlook on Netflix stock is supported by expectations of healthy double-digit revenue growth in both 2025 and 2026, continued operating margin expansion, a multi-year free cash flow ramp, and Netflix’s strong position in the streaming market. Current InvestingPro data shows revenue growth of 15% and a P/E ratio of 51.32, reflecting the market’s high growth expectations. The potential for Netflix to become a global television powerhouse as it expands its member base is also a contributing factor to the optimistic stance. JPMorgan projects average growth rates of 13% for revenue, 22% for operating income, 24% for GAAP EPS, and 30% for free cash flow in 2025 and 2026, which underpins Netflix’s premium valuation. The price target is based on approximately 38 times the estimated 2026 GAAP EPS of $30.46 and around 42 times the estimated 2026 free cash flow of $11.7 billion. For deeper insights into Netflix’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
In other recent news, Netflix has made several significant announcements that are likely to interest investors. The company is planning a major overhaul of its TV app interface and is introducing generative AI to the iOS mobile platform, aiming to enhance user experience through more intuitive and personalized content discovery. Furthermore, Moody’s Ratings has upgraded Netflix’s senior unsecured notes to A3, citing the company’s strong competitive position, expanding profitability, and robust free cash flow. This upgrade reflects confidence in Netflix’s financial stability and growth prospects.
BMO Capital Markets has also reiterated its positive stance on Netflix, maintaining an Outperform rating and raising its price target to $1,200, driven by recent advancements in advertising and expected margin expansion. The introduction of an ad-supported video on demand (AVOD) tier is anticipated to boost ad revenue growth significantly. Meanwhile, Citi analysts have maintained a Neutral rating on Netflix, with a price target of $1,020, noting potential challenges from proposed tariffs on international content.
Netflix’s strategy to produce localized content in over 50 countries is expected to mitigate these risks. The company is also focusing on integrating shows, movies, and games, with a notable emphasis on established titles like the Grand Theft Auto series. These developments underscore Netflix’s ongoing efforts to innovate and diversify its revenue streams in a competitive media landscape.
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