Street Calls of the Week
Investing.com - UBS maintained its Buy rating and $1,495.00 price target on Netflix (NASDAQ:NFLX), which has delivered an impressive 56.93% return over the past year and maintains a perfect Piotroski Score of 9 according to InvestingPro, following what it described as "solid" third-quarter results.
The streaming giant reported 17% year-over-year revenue growth on a foreign-exchange neutral basis, matching its second-quarter performance, while operating income grew 33% excluding a one-time charge related to a Brazil tax dispute, exceeding Street expectations of 25%. The company’s strong performance is reflected in its "GREAT" financial health score from InvestingPro, with trailing twelve-month revenue reaching $41.7 billion.
Netflix management attributed the growth to increased membership, higher pricing, and growing advertising revenues, according to UBS’s research note.
The company’s guidance projects 17% foreign-exchange neutral revenue growth and 26% operating income growth for the fourth quarter, supported by a strong content slate including "Monster" (October 3), "The Witcher" (October 30), "Frankenstein" (November 7), "Stranger Things," and NFL games on Christmas.
UBS noted that Netflix management remains focused on organic business reinvestment and "selective M&A," specifically stating they have no interest in legacy media assets, which UBS interprets as potentially leaving the door open for Warner’s studio assets.
In other recent news, Netflix reported its third-quarter 2025 earnings, revealing that earnings per share fell significantly short of expectations, coming in at $5.87 compared to the anticipated $6.96. Despite this earnings miss, the company’s revenue matched forecasts at $11.51 billion. Analysts from Oppenheimer highlighted Netflix’s profitability, noting that third-quarter earnings per share exceeded their estimates by 6%, excluding a Brazilian tax payment. Jefferies pointed out that Netflix’s revenue growth was 17% year-over-year, aligning with expectations, and noted an operating margin of 33.6%, excluding one-time expenses. BMO Capital mentioned a $619 million expense related to a dispute with Brazilian tax authorities, which contributed to an 8% miss on operating income. Evercore ISI observed that Netflix’s revenue missed guidance by 0.1%, marking the first revenue miss in two years. Despite these mixed results, Oppenheimer and BMO Capital both reiterated their Outperform ratings, while Jefferies maintained a Buy rating, with respective price targets reflecting confidence in Netflix’s future performance.
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