Wells Fargo lifts Netflix stock price target to $1,222

On Monday, Wells Fargo (NYSE:WFC) maintained an Overweight rating on Netflix (NASDAQ:NFLX) stock and increased the price target slightly to $1,222 from $1,210, citing a clear path for growth as evidenced by the company’s first-quarter results. The streaming giant, now valued at $414.2 billion, has demonstrated remarkable strength with a perfect Piotroski Score of 9 according to InvestingPro data, indicating exceptional financial health across all key metrics. The analyst at Wells Fargo highlighted that Netflix’s Q1 revenue reached $10.5 billion, marking a 12.5% year-over-year increase, which was slightly above their own and the consensus estimates. The operating income (OI) of $3.3 billion exceeded expectations by 13% and 12% respectively, and the operating income margin of 31.7% included benefits from expense timing.

Netflix’s earnings per share (EPS) for the quarter came in at $6.61, surpassing estimates by 17%. The streaming giant maintained its 2025 revenue guidance of $43.5 to $44.5 billion and an operating income margin of 29%, a 230 basis points increase year-over-year. This strong performance aligns with the company’s impressive 15% revenue growth over the last twelve months, reaching $40.17 billion. InvestingPro analysis shows 13 analysts have recently revised their earnings estimates upward, suggesting continued momentum. For the second quarter of 2025, the company’s operating income and margin guidance is also projected to be above the Street consensus, with an expected increase of approximately 13%.

Despite an anticipated ramp-up in expenses in the second half of the year due to content and investments, Wells Fargo analysts raised their 2025 and 2026 operating income margin estimates from 29.0% and 31.4% to 29.5% and 31.5%, respectively. They also noted that the higher margins in the first half of the year, along with some foreign exchange tailwinds, suggest the possibility of exceeding management’s 29% margin target. However, the company is facing high single-digit growth in content amortization this year and significant investments in advertising personnel, technology, and user interface improvements.

Wells Fargo’s updated estimates for Netflix’s 2025 and 2026 revenue, operating income, operating income margin, and EPS all show increases from their previous projections. The analysts estimate a 2025 free cash flow of approximately $8.6 billion, which is slightly ahead of Netflix’s guidance of around $8 billion, and they expect the majority of this to be used for stock repurchases. Trading at a P/E ratio of 46x and showing a remarkable return on equity of 41%, Netflix demonstrates both premium valuation and operational excellence. For deeper insights into Netflix’s valuation and growth prospects, investors can access comprehensive analysis through InvestingPro’s detailed research reports, which include over 30 additional key metrics and expert commentary. The company’s leverage is considered modest. While Netflix no longer discloses net additions, Wells Fargo estimates 25 million and 20 million for 2025 and 2026, respectively.

In other recent news, Netflix’s first-quarter earnings report for 2025 has drawn varied reactions from major financial firms. Morgan Stanley (NYSE:MS) raised its price target for Netflix to $1,200, maintaining an Overweight rating, citing the company’s predictable business model and potential for 20-25% annual earnings per share growth over the next four years. Canaccord Genuity also increased its target to $1,200, highlighting Netflix’s solid revenue and profitability, along with its strategic use of artificial intelligence in content production. Meanwhile, Citi maintained a Neutral rating and a $1,020 price target after Netflix’s operating income exceeded expectations, underscoring the company’s operational efficiency.

Goldman Sachs adjusted its price target to $1,000, reflecting Netflix’s robust financial performance and consistent revenue growth, but kept a Neutral rating, indicating a balanced view of risks and rewards. Raymond (NSE:RYMD) James decided to maintain its Market Perform rating, noting Netflix’s slight revenue beat and resilience to macroeconomic fluctuations, despite high market expectations. These recent developments underscore Netflix’s strategic maneuvers in pricing and advertising, positioning it favorably in the competitive streaming landscape.

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