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On Friday, BMO Capital Markets maintained its positive stance on Netflix Inc. (NASDAQ:NFLX) shares, with analyst Brian J. Pitz increasing the price target to $1,200 from the previous $1,175. The firm continues to endorse an Outperform rating for the streaming giant, which currently trades at $973.03 and boasts a market capitalization of $416 billion. According to InvestingPro data, Netflix has achieved an impressive 59% return over the past year, though the stock currently trades above its Fair Value estimate.
Pitz’s optimism is rooted in the successful launch of Netflix’s advertising-supported tier in the United States on April 1, with plans to expand internationally starting in the second quarter of 2025. The analyst anticipates a significant growth in ad revenue for Netflix in 2025, projecting a doubling of such income streams. This forecast is supported by the expected scaling of the ad-supported tier, which is likely to benefit from higher user engagement, various pricing strategies, and the introduction of advanced programmatic and AI technologies slated for 2026 and beyond. The company’s strong financial foundation is evident in its perfect Piotroski Score of 9 and "GREAT" financial health rating from InvestingPro, which offers 16 additional valuable insights about Netflix’s performance and prospects.
The analyst also noted that Netflix is set to enhance its Ad-Tech suite, including partnerships with The Trade Desk (NASDAQ:TTD), DV360, among others, across its remaining ten advertising markets in the near future. This expansion is expected to attract larger, brand-focused advertisers initially, which could contribute to the anticipated doubling of ad revenue in 2025. Additionally, there is potential for growth through small and medium-sized business (SMB) advertisers, with more sophisticated targeting and machine learning or AI integrations to come in 2026, offering further potential for ad revenue increases.
BMO Capital’s analysis also includes a projection of ad frequency, estimating an average of approximately 4.5 to 5 times per hour per person by the end of 2025, with a slight increase to 6 times by the following year. This model reflects a conservative approach to ad load, which could enhance the viewer experience while still driving ad revenue growth.
In summary, the raised price target to $1,200 from $1,175 reflects BMO Capital’s confidence in Netflix’s ability to grow its ad-supported tier and leverage technological advancements to boost its advertising revenue significantly in the coming years. The company’s revenue has already grown by 15.65% over the last twelve months, demonstrating strong momentum. For deeper insights into Netflix’s valuation and growth potential, including exclusive financial metrics and expert analysis, check out the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Netflix Inc. reported its first-quarter results for 2025, significantly surpassing earnings expectations. The company achieved an earnings per share (EPS) of $6.61, outpacing the forecasted $5.69, and reported revenue of $10.54 billion, slightly above the anticipated $10.5 billion. This performance reflects Netflix’s effective cost management and strategic investments in content and technology. Additionally, Netflix is expanding its proprietary ad tech platform to 10 more markets, aiming to double its advertising revenue in 2025. The company remains focused on enhancing content discovery and improving the member experience. Analyst firms have noted Netflix’s optimistic outlook, with projections of $8 billion in free cash flow by the end of the year. Netflix’s strategic growth initiatives include expanding its ad tech capabilities and increasing its presence in global markets. Despite economic uncertainties, Netflix continues to capture market share in the streaming industry, serving over 300 million paid households.
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