Netflix stock rating downgraded to Neutral by Seaport Global Securities

Investing.com - Seaport Global Securities downgraded Netflix (NASDAQ:NFLX) from Buy to Neutral on Monday ahead of the streaming giant’s July 17 earnings release. The stock, which has surged nearly 88% over the past year and is trading close to its 52-week high, appears overvalued according to InvestingPro Fair Value metrics.

The downgrade comes as Netflix appears to be pursuing new partnerships to increase user engagement, reduce churn, and boost advertising revenue, according to Seaport Global analyst comments. Recent announcements with TF1 and industry speculation about potential talks with Spotify (NYSE:SPOT) suggest Netflix is working to capture more consumer media usage time. The strategy appears to be working, with revenue growing 15% in the last twelve months for the $552 billion market cap company.

Seaport Global has adjusted its Netflix forecasts, incorporating greater global price increases through 2030 and increasing advertising revenue estimates by approximately 40% by 2030, exceeding the company’s reported internal target of $9 billion for that year.

The research firm also expanded margin projections, noting that selective distribution deals as an aggregator could reduce Netflix’s need to compete for expensive content rights, including potentially sports content like NFL programming.

Despite these positive long-term adjustments to their valuation model, Seaport Global indicated the average of their approaches suggests less than 10% upside potential from current levels, prompting the rating change to Neutral. The stock’s elevated P/E ratio of 60 and current trading levels relative to Fair Value support this cautious stance.

In other recent news, Netflix has been making headlines with a series of developments. Goldman Sachs has raised its price target for Netflix to $1,140, up from $1,000, while maintaining a Neutral rating. This adjustment comes ahead of Netflix’s second-quarter 2025 earnings report, with the bank highlighting the company’s strong content slate as a key factor. Meanwhile, Netflix’s hit series "Squid Game" set a new record with its third season, achieving 60.1 million views in just three days. This performance places it among Netflix’s most-watched non-English TV shows.

Additionally, Netflix announced the opening of its first two Netflix House locations in Philadelphia and Dallas in late 2025, with a third planned for Las Vegas in 2027. These venues will feature immersive experiences based on popular Netflix shows, offering interactive attractions and themed merchandise. JPMorgan, on the other hand, reiterated its Neutral rating with a $1,220 price target, citing a balanced risk/reward scenario. The firm noted that Netflix’s shares trade at high multiples, reflecting potential upside already factored into its valuation. Despite these high valuations, JPMorgan projects ongoing revenue growth and margin expansion for Netflix through 2026.

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