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On Friday, UBS analyst John Hodulik increased the price target for Netflix (NASDAQ:NFLX) shares to $1,150 from $1,140, while reiterating a Buy rating on the company. According to InvestingPro data, Netflix currently trades at $973.03, with analyst targets ranging from $700 to $1,494. The revision reflects a positive outlook on the streaming giant’s performance, particularly after a strong first quarter that surpassed expectations.
Netflix reported a 16% year-over-year revenue growth in the first quarter, which outperformed UBS’s estimate of 15%. With trailing twelve-month revenue reaching $39 billion and a robust gross profit margin of 46%, the company demonstrates strong operational efficiency. Operating income (OI) for the same period saw an even more substantial increase of 27%, doubling the 14% UBS had estimated. This growth was attributed in part to the timing of expenses.
The company’s management highlighted that the revenue uptick was driven by solid membership growth, as well as the implementation of price increases in several markets, including the U.S., Canada, Portugal, and Argentina. These changes are expected to contribute fully to the second quarter’s revenue, which is forecasted to accelerate to 17% year-over-year. InvestingPro analysis reveals Netflix maintains a perfect Piotroski Score of 9, indicating exceptional financial strength. Subscribers can access 16 additional ProTips and comprehensive financial metrics.
Looking ahead, Netflix’s second-quarter guidance anticipates an operating margin that is 400 basis points higher than the previous year for the first half. This is supported by an expected $3.7 billion in EBIT, a figure that stands significantly above the prior Street consensus of $3.3 billion, marking an approximate 40% increase from the previous year.
Management also noted that the second half of the year would see a rise in content amortization and marketing expenses. This is due to the return of popular series such as "Stranger Things," "Squid Game," and "Wednesday," in addition to higher costs associated with supporting the company’s burgeoning advertising business.
In other recent news, Netflix reported its first-quarter results for 2025, exceeding earnings expectations with an EPS of $6.61, compared to the forecasted $5.69. The company’s revenue was reported at $10.54 billion, slightly above the anticipated $10.5 billion. Pivotal Research raised its price target for Netflix shares to $1,350, maintaining a Buy rating, citing a 25% year-over-year growth in EBITDA and strong free cash flow. Jefferies also maintained a Buy rating, with a price target of $1,200, highlighting Netflix’s resilience in an uncertain economic environment and potential growth from its advertising tier. BMO Capital Markets increased its price target to $1,200, emphasizing the successful launch of Netflix’s advertising-supported tier and anticipated significant growth in ad revenue by 2025. Netflix’s strategic moves, such as the introduction of an ad-supported tier and pricing adjustments, are expected to contribute to financial growth and stability. The company continues to expand its proprietary ad tech platform and plans to double its advertising revenue in 2025.
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