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On Monday, Morgan Stanley (NYSE:MS) reaffirmed its confidence in Netflix (NASDAQ:NFLX) shares, raising the price target to $1,200 from the previous $1,150, while maintaining an Overweight rating on the stock. The streaming giant, now valued at $414.2 billion, has demonstrated remarkable momentum with a 75% return over the past year. The firm’s analysts believe that Netflix’s business model exhibits a high level of predictability and resilience, even in the face of potential economic headwinds. According to InvestingPro data, the company maintains a perfect Piotroski Score of 9, indicating strong financial health.
The decision to adjust the price target comes as Netflix has ceased reporting net subscriber additions, a move that prompts analysts to consider the company’s broader performance metrics. Morgan Stanley emphasizes the significance of the streaming giant’s consistent subscriber engagement and ongoing innovation in its products and monetization strategies as key factors underpinning its positive outlook. With 13 analysts recently revising earnings estimates upward, the market consensus appears increasingly optimistic. Discover more valuable insights about Netflix and 1,400+ other companies through comprehensive Pro Research Reports available on InvestingPro.
The analysts project that Netflix’s adjusted earnings per share (EPS) could grow at a rate of 20-25% annually over the next four years. This growth expectation is supported by anticipated double-digit revenue increases and sustained margin expansion, with current revenue growth at 15% and a healthy gross margin of 47%. The firm’s bullish scenario suggests a potential 60% upside for Netflix shares, estimating an adjusted EPS of approximately $45 by 2027. Based on InvestingPro’s Fair Value analysis, the stock currently appears to be trading above its intrinsic value.
Morgan Stanley’s analysis points to nearly two hours of daily engagement per subscriber on the platform, a metric that is expected to rise. This level of user involvement, coupled with Netflix’s continuous product enhancements and new ways to generate revenue, is seen as a strong foundation for long-term growth.
In detailing their financial forecasts, Morgan Stanley provided a range of scenarios. The bull case sets a high bar with the aforementioned $1,550 price target and substantial adjusted EPS, while base and bear cases offer a more conservative spectrum of outcomes for investors to consider. These projections underscore the firm’s overall optimistic stance on Netflix’s future performance.
In other recent news, Netflix reported its first-quarter earnings for 2025, which met Wall Street revenue expectations and surpassed operating income estimates by 12%. The company’s outlook for the second quarter’s operating income and earnings per share (EPS) also exceeded analyst forecasts, with Citi maintaining a Neutral rating and a $1,020 price target. Goldman Sachs raised its price target from $955 to $1,000, highlighting Netflix’s robust financial performance and stable monetization patterns. Canaccord Genuity increased its price target to $1,200, emphasizing Netflix’s stable customer acquisition and retention, as well as its strategic use of artificial intelligence in content production. Raymond (NSE:RYMD) James maintained its Market Perform rating, noting Netflix’s strong pricing power and resilience to macroeconomic fluctuations, despite increased churn from high-profile events. Guggenheim raised its price target to $1,150, with the company’s second-quarter guidance exceeding expectations and a reacceleration in revenue growth anticipated. Overall, these developments underscore Netflix’s strong financial performance and strategic positioning in the market.
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