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On Tuesday, Netflix Inc. (NASDAQ:NFLX) shares saw its price target increased by a Wall Street firm, reflecting a positive outlook on the company's future subscriber growth and revenue prospects. The new price target is set at $775, up from the previous $725, with the firm maintaining a Buy rating on the stock.
The firm anticipates Netflix will report a higher than expected number of new subscribers in the second quarter of 2024. The forecast is for 5.19 million paid net additions, which is notably higher than the consensus estimate of 3.72 million. This optimism is based on the momentum from both paid sharing adjustments and the advertising-supported video on demand (AVOD) service.
The firm's second quarter 2024 consumer survey indicates that Netflix remains the preferred choice for living room entertainment, while YouTube continues to dominate mobile viewing. These findings reinforce the firm's confidence in Netflix's market position.
Investors and analysts will be keen to receive updates on the AVOD tier, including details on its monetization and margin trends, when Netflix releases its second-quarter results on July 18, 2024.
The upgrade in the price target to $775 is a reflection of the firm's reiterated Buy rating, suggesting continued positive performance for Netflix in the market.
In other recent news, Netflix's strategic move into live sports programming, notably its National Football League (NFL) deal, has led Argus to raise the company's share target from $660 to $767. The firm also retained its Buy rating for Netflix. Argus analysts project an earnings per share (EPS) of $18.35 for 2024 and $20.42 for 2025, indicating a long-term EPS growth rate of 15%.
Similarly, Loop Capital upgraded Netflix's share target from $700 to $750, citing strong viewership trends and potential revenue boosts from an anticipated price hike. Evercore ISI also increased its price target for Netflix from $650 to $700, emphasizing the company's strong financial and competitive position due to strategic initiatives and potential for revenue diversification.
On the labor front, the International Alliance of Theatrical Stage Employees (IATSE) secured a tentative three-year agreement with the Alliance of Motion Picture and Television Producers (AMPTP). This deal includes significant pay increases and terms regulating AI use in the industry, setting a precedent for integrating emerging technologies in filmmaking.
Meanwhile, Magnite, an advertising technology solutions provider, saw its share target raised to $15 from $13 by Evercore ISI, following the announcement of a partnership with Netflix. This collaboration is expected to significantly boost Magnite's connected TV revenue. These are the recent developments in the companies.
InvestingPro Insights
As Netflix Inc. (NASDAQ:NFLX) garners a bullish outlook from Wall Street, with an upgraded price target and a strong subscriber growth forecast, it's worth looking at some key metrics and insights from InvestingPro. The company is currently trading at a P/E ratio of 46.67, which is high but may be justified by the company's near-term earnings growth potential. Additionally, Netflix's revenue growth over the last twelve months as of Q1 2024 stands at 9.47%, with a notable quarterly increase of 14.81% in Q1 2024. This indicates a robust top-line expansion that aligns with the firm's optimistic subscriber addition predictions.
Two InvestingPro Tips that are particularly relevant to the article's context include Netflix's status as a prominent player in the Entertainment industry and the company's ability to sufficiently cover its interest payments with its cash flows. These factors contribute to the firm's positive assessment and the increased price target. Moreover, Netflix's revenue valuation multiples are on the higher side, reflecting its strong market position and investor expectations for future growth.
For readers interested in a deeper analysis, there are additional InvestingPro Tips available that shed light on Netflix's financial health and market performance. With the provided coupon code PRONEWS24, readers can get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription to access these valuable insights.
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