Wedbush maintains Netflix stock Outperform with $1,150 target

On Friday, Wedbush securities reaffirmed their optimistic stance on Netflix (NASDAQ:NFLX) shares, maintaining an Outperform rating and a price target of $1,150.00. The streaming giant, currently trading at $921.17 with a market capitalization of $394 billion, has demonstrated impressive momentum with a 27.45% return over the past six months. According to InvestingPro analysis, Netflix is currently trading above its Fair Value. The research firm's analysts highlighted Netflix's potential to significantly increase its ad tier revenue over the coming years. The company is expected to achieve this by incorporating more live events, enhancing its advertising solutions and targeting capabilities, and diversifying its content strategy. This optimism is supported by Netflix's strong financial health, evidenced by its perfect Piotroski Score of 9 and robust revenue growth of 15.65% in the last twelve months.

Netflix, which has traditionally relied on substantial subscriber growth as its main revenue driver, particularly in 2024, is anticipated to shift its focus. In 2025, revenue growth is expected to be propelled by price increases, and in 2026, further growth is predicted to stem from the ad tier. As Netflix continues to expand, Wedbush analysts suggest that its contribution margin could greatly surpass their estimates, which would lead to an increase in free cash flow.

The firm's analysts provided a statement regarding their decision to reiterate the Outperform rating: "Netflix is positioned to accelerate ad tier revenue contribution for the next several years by adding more live events, improving its advertising solutions and targeting, and broadening its content strategy. While massive subscriber growth was the primary driver in 2024, we expect price increases to drive revenue growth in 2025, and the ad tier to drive revenue higher in 2026. As Netflix expands from here, its contribution margin can massively exceed our estimates, driving outsized free cash flow. As such, we reiterate our OUTPERFORM rating."

This reiteration comes as Netflix continues to evolve its business model, adapting to the changing landscape of the streaming industry. With the company's plans to enhance advertising revenues and content offerings, Wedbush's analysis suggests a strong financial outlook for Netflix in the years ahead. InvestingPro subscribers can access 16 additional key insights about Netflix, including detailed analysis of its financial health, valuation metrics, and growth potential through the comprehensive Pro Research Report, available exclusively on the platform.

In other recent news, Netflix is set to report its first-quarter earnings for 2025, with expectations of slightly higher revenue and earnings before interest and taxes (EBIT) than analysts have estimated. Citi analysts have maintained a Neutral rating on Netflix with a price target of $1,020, citing favorable foreign exchange conditions as a factor for the anticipated outperformance. KeyBanc Capital Markets adjusted their outlook, reducing the price target from $1,100 to $1,000, while maintaining an Overweight rating. TD Cowen continues to express confidence in Netflix, maintaining a Buy rating and a price target of $1,150, anticipating a 12% year-over-year revenue increase in the first quarter of 2025. Bernstein has reaffirmed an Outperform rating with a $1,200 price target, highlighting Netflix's adeptness at navigating local taxes and regulations in European markets.

Netflix recently announced an update offering enhanced language options for television viewers, expanding the availability of subtitles and dubbing languages. This update aims to make its global catalog more accessible, as nearly a third of its viewership comes from non-English language shows. The language expansion follows thousands of requests from users, previously available only on mobile devices and web browsers. Netflix's strategic initiatives, including an ad-supported subscription tier and a foray into sports content, are also key areas of interest for investors. These developments are part of the company's efforts to diversify its revenue streams and enhance subscriber growth amidst increasing competition in the streaming industry.

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