Street Calls of the Week
Investing.com - Oppenheimer has reiterated an Outperform rating on Netflix (NASDAQ:NFLX) while maintaining its $1,425.00 price target, despite recent weakness in the stock due to a lack of near-term catalysts. According to InvestingPro data, Netflix currently trades at $1,241.35, having delivered an impressive 56.9% return over the past year. The stock appears overvalued based on InvestingPro’s Fair Value analysis.
The investment firm noted that investors may be overlooking Netflix’s profitability beat excluding a Brazilian tax payment, with third-quarter earnings per share coming in 6% above Oppenheimer’s estimate and 5% above Street consensus. Additionally, Netflix guided fourth-quarter free cash flow 64% above Oppenheimer’s projection and 47% above Street expectations, excluding the Brazilian tax payment. InvestingPro data reveals Netflix’s strong financial health, with a perfect Piotroski Score of 9 and robust revenue growth of 14.8% in the last twelve months.
Netflix achieved its highest quarterly viewing share in both the United States (8.6%) and United Kingdom (9.4%), representing increases of 15% and 22% respectively since the fourth quarter of 2022. The streaming giant is also experiencing meaningful improvements in advertising monetization, with strong growth in programmatic advertising and expectations for improved fill rates. With a market capitalization of $527.5 billion and an impressive gross profit margin of 48.5%, Netflix continues to demonstrate its dominance in the streaming industry. For deeper insights into Netflix’s financial metrics and growth potential, check out the comprehensive Pro Research Report available on InvestingPro.
Oppenheimer expressed optimism about Netflix’s content slate for the fourth quarter and fiscal year 2026, highlighting several returning hit shows including Bridgerton, Emily in Paris, and Avatar. When asked about Warner Bros. Discovery, Netflix did not rule out potential mergers and acquisitions but indicated it was not interested in "legacy media assets" such as cable networks, suggesting possible interest in studio assets if broken up.
The $1,425 price target is based on 35 times estimated 2027 earnings per share or 20 times estimated 2030 earnings per share.
In other recent news, Netflix reported its third-quarter 2025 earnings, revealing that revenue met forecasts at $11.51 billion. However, the company experienced a significant miss on earnings per share, which came in at $5.87 compared to the anticipated $6.96. This earnings shortfall marked a 15.66% negative surprise for investors. Jefferies maintained its Buy rating on Netflix, noting a 17% year-over-year revenue growth and an operating margin of 33.6% that exceeded forecasts, despite some mixed results. BMO Capital reiterated its Outperform rating with a $1,425 price target, highlighting challenges with operating income due to a $619 million expense from a dispute with Brazilian tax authorities. Evercore ISI also reiterated its Outperform rating, despite Netflix missing revenue guidance and Street expectations by 0.1%, marking its first revenue miss in two years. These developments reflect both the challenges and opportunities Netflix faces in the current market environment.
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