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On Friday, Pivotal Research adjusted its outlook on Netflix (NASDAQ:NFLX) shares, increasing the price target from $1,250 to $1,350, while maintaining a Buy rating on the company. Currently trading at $973.03, Netflix boasts a market capitalization of $416 billion and a perfect Piotroski Score of 9, according to InvestingPro data. The revised target follows Netflix’s recent quarterly financial report, which surpassed expectations with a 25% year-over-year growth in EBITDA, reaching $10.7 billion and outperforming Pivotal Research’s own forecast of 15%. Additionally, Netflix generated $2.7 billion in free cash flow, a 25% increase from the previous year and higher than the anticipated $2.4 billion.
Netflix’s first-quarter performance was complemented by guidance for the second quarter that exceeded analyst predictions for both revenue and operating income. With a strong revenue growth of 15.65% and an impressive YTD return of 9.17%, InvestingPro’s analysis indicates Netflix is currently trading above its Fair Value. Moreover, the company reiterated its full-year financial guidance, which, considering the robust first-quarter and second-quarter projections, may now appear conservative.
Pivotal Research’s endorsement of Netflix is further reinforced by an internal forecast leak, which was reported by The Wall Street Journal and aligns with Pivotal’s projections. The leaked data suggests that Netflix is on track to reach 410 million customers, $78 billion in revenue, and $30 billion in operating income, figures that are close to Pivotal’s estimates of 430 million subscribers, $74 billion in revenue, and $33 billion in operating income.
The analyst from Pivotal Research highlighted Netflix’s compelling value proposition, offering high entertainment value at a competitive price. Trading at a P/E ratio of 47.84, this entertainment industry leader shows strong potential for continued growth. This value is expected to be enhanced by the company’s ad-supported offerings, which should contribute to continued subscriber growth and average revenue per user (ARPU) expansion. The combination of potential price increases and the scaling up of advertising, despite the partially offsetting lower ARPU in developing markets, is seen as a strong growth driver for Netflix. For deeper insights into Netflix’s valuation and growth metrics, including 18 additional ProTips and comprehensive financial analysis, visit InvestingPro.
In other recent news, Netflix reported its first-quarter results for 2025, surpassing earnings expectations with an EPS of $6.61 compared to the forecasted $5.69. The company also achieved revenue of $10.54 billion, slightly above the anticipated $10.5 billion. Analysts from Jefferies and BMO Capital have maintained their positive outlook on Netflix, with both firms setting a price target of $1,200. Jefferies highlighted Netflix’s strong operating income and forward guidance, while BMO Capital noted the potential growth from Netflix’s advertising-supported tier. The advertising tier, launched in the United States, is expected to expand internationally by the second quarter of 2025, with projections of doubling ad revenue by that year. Netflix’s strategic moves in expanding its proprietary ad tech platform to more markets are anticipated to attract larger advertisers and contribute to revenue growth. Additionally, the company continues to focus on enhancing its content offerings and leveraging AI technologies to improve user experience and engagement. These developments reflect Netflix’s ongoing efforts to adapt and thrive in a competitive streaming landscape.
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