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On Monday, Raymond (NSE:RYMD) James maintained its Market Perform rating on Netflix (NASDAQ:NFLX) shares, following the company’s first-quarter earnings report for 2025. Analyst Andrew Marok noted that Netflix’s revenue slightly exceeded expectations and that the company reaffirmed its full-year outlook. According to InvestingPro data, Netflix maintains a perfect Piotroski Score of 9, indicating exceptional financial strength, while 13 analysts have recently revised their earnings estimates upward for the upcoming period. Despite a strong previous quarter fueled by high-profile events like the Tyson/Paul fight and NFL Christmas Day games, which may have led to increased churn, the impact was less severe than anticipated. The pricing power of Netflix remained robust, especially after price hikes in the US and UK markets.
Netflix has ceased providing subscriber metrics, yet Raymond James infers that the subscriber churn was not as significant as consensus estimates suggested. The company’s ad-supported tier is meeting expectations, with the in-house advertising technology rollout on track and membership numbers growing steadily. Marok highlighted that Netflix continues to be well-positioned in the market and resistant to macroeconomic fluctuations.
The analyst’s commentary also pointed to the stock being fairly valued at approximately 10 times the estimated 2025 enterprise value to revenue ratio, which translates to around 40 times the price-to-earnings ratio, based on after-hours trading levels. InvestingPro analysis shows Netflix currently trades at a P/E of 46x, with impressive returns of 75% over the past year and 26% in the last six months. Despite the positive aspects, Raymond James has decided to maintain its Market Perform rating due to the high expectations already set for Netflix’s performance.
Netflix’s stock valuation reflects the balance between its strong market position and the high expectations of its performance. The company’s strategy, including its pricing adjustments and the expansion of its ad-supported tier, appears to be in line with its growth objectives, as it continues to navigate the competitive streaming landscape without significant disruptions from subscriber churn or other market challenges. With a market capitalization of $414.2 billion and revenue growth of 15%, Netflix maintains a GREAT Financial Health Score according to InvestingPro, which offers 17 additional valuable insights and a comprehensive Pro Research Report for deeper analysis of this streaming giant.
In other recent news, Netflix reported strong first-quarter results, with revenue growth of 16% year-over-year, surpassing various analysts’ estimates. The company’s operating income also saw a significant increase, doubling some forecasts. Netflix’s guidance for the second quarter projects further revenue and operating income growth, exceeding Wall Street expectations. Analysts from Guggenheim, Oppenheimer, UBS, Pivotal Research, and Jefferies have responded positively, raising their price targets for Netflix shares. Guggenheim and UBS both set their targets at $1,150, while Oppenheimer and Jefferies aim higher at $1,200. Pivotal Research is the most optimistic, raising its target to $1,350. The analysts highlight Netflix’s successful price increases in the U.S. and other markets, which have not led to increased customer churn. Netflix’s strategic moves, including the introduction of an advertising-supported tier, are seen as potential growth drivers. The company also remains confident in its 2025 guidance, despite anticipating higher costs later this year due to content and advertising investments.
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