On Monday, Canaccord Genuity adjusted its price target for Netflix, Inc. (NASDAQ:NFLX), increasing it to $940 from the previous $760 while maintaining a Hold rating on the stock. The revised price target follows a remarkable year for Netflix shares, which have surged over 90% in the past 12 months and are currently trading near their 52-week high of $908. According to InvestingPro data, the stock appears to be trading above its Fair Value, with an RSI suggesting overbought territory.
Netflix's third-quarter results were a key factor in the analyst's assessment, with the streaming giant reporting subscriber additions that surpassed consensus estimates, revenue that slightly exceeded expectations, and operating income that was significantly above guidance.
The company achieved impressive revenue growth of 14.8% over the last twelve months, reaching $37.6 billion, while maintaining a healthy 45.25% gross margin. Both the United States and Canada (UCAN) and Europe, Middle East, and Africa (EMEA) regions experienced robust year-over-year revenue growth. This success was attributed to strong user engagement and the ongoing benefits from the company's consistent price hikes.
During the third quarter, Netflix phased out its Basic plan in the US and France and has plans to eliminate the same offering in Brazil in the fourth quarter. The company's introduction of an ad-supported tier has also been met with positive reception. This tier accounted for half of the new sign-ups in countries where it was available during the third quarter, bringing the total monthly active users (MAUs) for the ad tier to over 70 million.
Netflix's recent foray into live streaming events was highlighted by the Jake Paul vs. Mike Tyson boxing match. Despite encountering some technical issues that affected certain streams, the event attracted over 108 million live global viewers and generated more than 1.4 billion owned impressions, showcasing the platform's extensive reach and potential for hosting live events.
With an overall "GREAT" financial health score on InvestingPro, Netflix continues to demonstrate strong operational execution. Subscribers can access over 20 additional exclusive ProTips and a comprehensive Pro Research Report for deeper insights into Netflix's valuation and growth prospects.
In other recent news, Netflix has been the focus of several key developments. Evercore ISI reiterated an Outperform rating on the streaming giant, bullish on its growth and content leadership. The firm cited potential catalysts for Netflix's performance, including the streaming of NFL games, the anticipated release of "Squid Games II", WWE Raw events, and pending price increases. Analysts anticipate a mid-single-digit percentage upside to Wall Street's earnings estimates for the year 2026.
In addition, Netflix's live streaming of the boxing match between Jake Paul and Mike Tyson attracted a significant global audience, marking a milestone for the company's live events strategy. Pivotal Research has responded positively to the event, increasing its price target for Netflix to $1,100. BofA Securities also elevated the price objective to $1,000, citing the company's positive earnings momentum and its evolving opportunities in advertising and live content.
CFRA Research's Kenneth Leon highlighted Netflix's foray into live sporting events, anticipating that advertising will become a significant contributor to revenue by 2026. Amid these developments, Netflix announced the departure of executives Dean Garfield and Rachel Whetstone.
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