Netflix gets a new Wall Street bull as rally is set to continue

Investing.com -- Netflix shares are up 1.5% in premarket trading Thursday, looking to extend a rally that’s pushed the stock up more than 12% over the past week, after Piper Sandler initiated coverage with an Overweight rating and a Street-high $1,100 price target.

“Currently, NFLX may be the best positioned name in consumer internet,” the firm wrote in a new note. 

Piper Sandler praised Netflix’s “strong entertainment value proposition and defensible subscription model,” which it said offers insulation in a recession. But beyond stability, analysts highlighted multiple growth drivers.

Netflix’s ad-supported tier was described as a major catalyst, with the firm noting that “in just over two years, NFLX has scaled the ads tier to ~80MM monthly viewers.” 

Piper Sandler added that “where available, ads drive 55% of new sign-ups.”

Survey data is also said to point to strengthening consumer engagement. “Taken together, NFLX and YouTube dominate at ~60% of teen viewing, but NFLX share has increased the last 3 surveys to 29%, 30% and recently 31% share,” the analysts said, noting no other service cracks double digits.

Piper Sandler called Netflix’s content slate “Tier 1,” citing recent hits like The Night Agent and Adolescence, and said streaming as a whole is gaining ground, now accounting for “44% of TV time spent and up 5%+ y/y.” 

Netflix (NASDAQ:NFLX) commands 8% of total TV time and roughly 20% of streaming, according to the note.

While the stock isn’t cheap by valuation, Piper Sandler said the premium is justified. 

“We believe the premium – especially in this environment – is worth it.” The firm forecasts revenue to grow at a 12% compound annual rate through 2030, with “~200bps annual margin expansion.”

Netflix is “on offense,” Piper concluded, with “a superior content slate and burgeoning ads business.”