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Investing.com - UBS has reiterated its Buy rating on Netflix (NASDAQ:NFLX) stock with a price target of $1,495.00, citing the streaming giant’s position as a "secular winner" benefiting from direct-to-consumer rationalization and strong content. Currently trading at $1,201.67 with a market capitalization of $512 billion, InvestingPro analysis indicates Netflix is trading above its Fair Value, though the stock has delivered an impressive 71% return over the past year.
The firm expects Netflix to report 17% revenue growth and 25% operating income growth in the third quarter, aligning with management guidance, compared to 16% revenue growth and 45% operating income growth in the previous quarter. With a perfect Piotroski Score of 9 according to InvestingPro, Netflix demonstrates strong financial health as it maintains 14.84% revenue growth over the last twelve months. UBS believes the return of popular shows like Squid Game and Wednesday, along with new hits such as KPop Demon Hunters and Untamed, provided a boost to engagement and monetization.
UBS anticipates continued strong performance in the fourth quarter, with content including Monster, The Witcher, Stranger Things, and NFL programming supporting an estimated 16% revenue growth and 22% operating income growth. The firm has long believed that pullbacks from competitors could drive upside to Netflix’s pricing and margins over time.
For 2025, UBS models 15% revenue growth and 30% operating income growth with margins expanding 330 basis points year-over-year, followed by 13% revenue growth and 27% operating income growth in 2026 with margins improving by an additional 350 basis points.
With projected content spending of $17.9 billion in 2025 and $19.0 billion in 2026, UBS expects Netflix’s free cash flow to increase from $9.2 billion in 2025 to $13.3 billion in 2026, compared to consensus estimates of $8.9 billion and $12.3 billion, respectively. InvestingPro subscribers can access 15+ additional exclusive tips and comprehensive financial metrics in our Pro Research Report, offering deeper insights into Netflix’s valuation and growth potential.
In other recent news, Netflix’s engagement saw a notable increase during the third quarter of 2025, primarily driven by the success of "K-Pop Demon Hunters," which contributed approximately 500 million viewing hours. Bernstein has reiterated its Outperform rating on Netflix, maintaining a price target of $1,390. KeyBanc also upheld its Overweight rating with the same price target, citing an improved content slate boosting viewership and expressing no anticipation of major surprises in Netflix’s upcoming third-quarter earnings. Jefferies maintained its Buy rating and $1,500 price target, projecting revenue growth exceeding 17% year-over-year on an ex-FX basis for the third quarter. Meanwhile, Morgan Stanley removed Netflix from its Top Pick list, although it retained an Overweight rating and a $1,500 price target, following the firm’s criteria for automatic removal after six months on the list. Additionally, Netflix and Spotify have announced a partnership to introduce video podcasts to the Netflix platform starting in early 2026, initially launching in the United States. This collaboration will feature popular shows from Spotify Studios and The Ringer, such as The Bill Simmons Podcast and The Rewatchables.
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