Street Calls of the Week
Investing.com - Piper Sandler reduced its price target on Netflix (NASDAQ:NFLX) to $1,400 from $1,500 while maintaining an Overweight rating following the company’s third-quarter 2025 earnings report. According to InvestingPro data, Netflix currently trades at a P/E ratio of 52.9x and has delivered an impressive 56.9% return over the past year, though the stock appears overvalued based on its Fair Value assessment.
The streaming giant delivered mixed results for the quarter, with revenues meeting expectations but operating income falling short due to a $619 million tax dispute accrual in Brazil. Despite the tax issue, Netflix maintains strong financial health, earning a "GREAT" rating from InvestingPro’s comprehensive analysis, with revenue growing at 14.8% year-over-year. Netflix shares declined approximately 6% in after-hours trading following the announcement.
Piper Sandler noted that excluding the tax accrual in cost of goods sold, Netflix’s operating margin would have exceeded their forecast by 200 basis points. The firm described the fourth-quarter guidance as solid relative to their expectations, though it fell below the most optimistic market projections for continued top-line acceleration.
On a positive note, Netflix reported its highest-ever engagement growth in the US and UK markets, which the research firm attributed to the company’s content slate. Additionally, Netflix raised its free cash flow guidance to approximately $9 billion for fiscal year 2025.
The price target adjustment comes as Piper Sandler made slight modifications to its estimates for the streaming service, though the firm maintained its overall positive outlook with the Overweight rating.
In other recent news, Netflix’s third-quarter earnings report has been the focus of various analyst assessments. The streaming service reported a 17% year-over-year revenue growth, aligning with market expectations but slightly below initial projections due to foreign exchange fluctuations. Despite this, Netflix’s operating income surpassed expectations, achieving a 33.6% margin excluding a one-time Brazilian tax expense. Analysts have reacted to these results with varied ratings and price targets. Raymond James reiterated a Market Perform rating, while JPMorgan adjusted its price target slightly lower to $1,275, maintaining a Neutral stance. UBS and Jefferies both upheld their Buy ratings, with price targets of $1,495 and $1,500, respectively, citing solid results. Oppenheimer also maintained an Outperform rating, highlighting Netflix’s profitability and impressive free cash flow guidance for the fourth quarter. These developments underscore Netflix’s consistent performance and continued investor interest.
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