On Thursday, Morgan Stanley reiterated a positive outlook on Netflix (NASDAQ:NFLX) shares, raising the price target to $820 from the previous $780 while maintaining an Overweight rating. The firm expressed continued confidence in the company's growth potential, citing a long runway for revenue growth, expectations for operating leverage and earnings per share (EPS) that surpass consensus, and an expanding competitive moat.
The adjustment in the price target reflects a forward-looking valuation as Morgan Stanley shifts its analysis to the year-end of 2025. This strategic move aims to account for the company's future financial performance and market positioning.
Supporting the bullish stance, Morgan Stanley highlighted the recent Netflix engagement report for the first half of 2024. The analysis of user engagement with the streaming platform's content underpins the firm's optimistic view of Netflix's market performance and growth trajectory.
Netflix, listed on NASDAQ under the ticker NFLX, has been the subject of financial analysts' assessments as it navigates the competitive landscape of digital streaming services. The company's ability to generate sustained revenue growth and enhance its market position has been a focal point for investors.
The updated price target of $820 suggests that Morgan Stanley anticipates a favorable investment outlook for Netflix, based on the company's operational strategies and market dynamics. With the Overweight rating unchanged, the firm signals that it expects Netflix's stock performance to outpace the average return of the stocks covered by Morgan Stanley over the medium term.
In other recent news, Netflix's earnings and revenue potential have been the focus of several analyst assessments. Citi maintained a neutral stance on Netflix, expressing skepticism about the company's ability to achieve an optimistic earnings per share (EPS) of $25 next year. However, they acknowledged Netflix's potential for a 15% topline growth driven by net subscriber additions and price increases. Deutsche Bank, while holding its rating, increased the stock target to $650, citing potential growth in revenue and earnings.
JPMorgan reiterated its Overweight rating on Netflix, emphasizing the company's potential for strong growth and increasing free cash flow. On the contrary, Barclays downgraded Netflix from Equalweight to Underweight due to concerns over the company's growth prospects. TD Cowen held a Buy rating for Netflix, indicating faith in the company's advertising growth trajectory.
In recent developments, the Philippines imposed a 12% value-added tax on digital services provided by tech giants like Netflix, expected to generate approximately 105 billion pesos ($1.9 billion) from 2025 to 2029. Analysts from firms such as KeyBanc Capital Markets, JPMorgan, and Evercore ISI project positive revenue growth for Netflix, with advertising expected to account for more than 10% of total revenue by 2027.
InvestingPro Insights
The positive outlook from Morgan Stanley aligns with several key metrics and insights from InvestingPro. Netflix's market capitalization stands at an impressive $312.19 billion, reflecting its dominant position in the entertainment industry. The company's revenue growth of 13% over the last twelve months and a robust 16.76% quarterly growth underscore its continued expansion, supporting Morgan Stanley's view of a long runway for revenue growth.
InvestingPro Tips highlight that Netflix is trading near its 52-week high and has delivered a remarkable 94.85% return over the past year. This performance aligns with the analyst's bullish stance and increased price target. Additionally, Netflix's strong operating income margin of 23.82% and EBITDA growth of 50.33% in the last twelve months suggest the company is effectively leveraging its scale, which could contribute to the operating leverage and EPS growth Morgan Stanley anticipates.
For investors seeking a deeper understanding of Netflix's financial health and market position, InvestingPro offers 15 additional tips, providing a comprehensive analysis to inform investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.