Netflix Stock A Perfect 10 In Analyst Price Upgrades, No Magnificent 7

Netflix stock (NASDAQ: NFLX) started the week on a sour note, with NFLX share price down 2.52% to begin the week. The yearly ascent of the stock has been as impressive as anything we have seen from Netflix for quite some time, and the momentum and sentiment is certainly creating a bit of buzz.

With yet another price target upgrade coming at the end of yesterday, we take a look at a few of the recent developments at the streaming giant, including its' exclusion from one list, and its' price target upgrade on ten others recently!

Price Target Update 15th Apr: Not one to miss the party of Netflix share price target raises, Macquarie comes in before earnings (18th) with an upgrade of their own. The consensus amongst analysts so far looks to be a beat on earnings, and subscription adds to outperform.

Macquarie have added in their note that there is “room to run” in 2024 on subscription additions driven in part by the crackdown on c~100million password sharing Netflix users (already noted to have brought close to 30million subs in 2023).

The price target set by Macquarie was increased by a hefty $90, increasing their mark to $685 (previously $595). In the note, they see more upside to come from NFLX and retain their ‘Outperform' rating on the stock.

With earnings on the horizon, we take a look at analyst views, as there have been some rather major moves in the past days that show a growing confidence in the streamers ability to pull results out of the bag when they really matter.

Netflix Share Price Target Updates

Is Netflix stock a buy? Taking a look at the last month only, there have been no less than 10 analyst price target adjustments, with each and every one of them revising upwards! A perfect 10.

That does not always tell the full story of course, but if you are considering investing in Netflix shares, it is certainly worth getting the latest views from the street before any big potential event.

We do just that, taking a look at each of the 10 adjustments below.

• Morgan Stanley – ‘buy‘ rating and $700 price target (was $600). As well as the price target hike, analyst Benjamin Swinburne added notes of an expected EPS growth rate of 25% for FY24-FY28, warranting a ‘premium multiple'.
  
• Piper Sandler – ‘neutral rating and $600 target (from $550). Comments around the Netflix expectation shift to “how big is the beat” demonstrate how things have shifted over the past year.
  
• Keybanc – ‘overweight‘ rating and $725 price target (was $580). Mentioned signs of improving content acting as a driver, anticipates 2025 revenue growth of 14% YoY and EPS growth reaching $28.18 in 2026.
  
• Loop Capital – ‘ buy‘ rating and $700 (from $585). Expecting to see the competitive landscape easing as traditional media rises prices of their own streaming offerings. Also sees improving near term engagement along with macro trends.
  
• Citi – ‘neutral‘ rating and $660 (from $555). Increased target is a reflection of the scope for consensus subscriber numbers to be exceeded, and sees earlier beats being the result of the advertising tier, and password crackdowns. A raise in price target but a hold on neutral rating reflects.
  
• Wedbush – ‘outperform‘ rating and $725 (from $615). Expecting to see seasonal deceleration in subscribers to the ad tier, but sees limited churn and strong results on the horizon.
  
• Pivotal Research – ‘buy‘ rating and price target $765 (was $700). The street high target is supported by surpassing subscriber numbers and revenue per user metrics, along with a strong core business.
  
• JPMorgan – ‘overweight‘ rating and target $650 (from $610). Feels “lowest hanging fruit” has been captured last year, but there remains significant upside.
  
• TD Cohen – ‘buy‘ rating and price target of $725 (from $600). Increasing ad tier adoption, breadth of global content and expectation of 5.11million adds to come in significantly above consensus (4.11m).
  
• Barclays – ‘equal‘ rating and PT of $550 (was $475). Expecting a strong quarter, but anticipating growth becoming harder.

Price targets are not everything, and analysts have got things wrong more than once in the past. Nevertheless, using expectations as a barometer within your own analysis can certainly be useful. The forthcoming earnings report will not only reflect Netflix's performance over the previous quarter but may also provide insights into its outlook for the remainder of the year.

Earnings Coming, FAANGs Out?

As the Q1 earnings season picks up pace, all eyes are on Netflix, which is scheduled to release its latest quarterly report this Thursday, April 18, after the bell. Investors and analysts alike are keen to see whether the streaming behemoth can maintain the impressive growth trajectory that has captivated the market in previous quarters.

Netflix shareholders are having a strong year, with the Netflix stock up 32.36% year to date, and 84.61% over the last 12 months. Despite this, Netflix have been removed from one of the top lists of mega cap techs, ever since FAANG became the Magnificent 7.

FAANG, one of the most popular tech acronyms of recent years included tech stalwarts such as Facebook (now Meta Platforms), Apple, Amazon, Netflix, and Google (Alphabet). Since the rapid ascent of Tesla, and latterly Nvidia made waves in the market, they required adding, alongside Microsoft, with Netflix the one company making way. FAANG plus three, minus one streaming giant apparently equals 7.

Why were Netflix removed from FAANG? To start, the FAANG acronym no longer worked with the Facebook rebrand, and no-one could dispute at the time that the other companies were undeserving of inclusion. Nevertheless, the removal of Netflix does feel rather unfair considering its' industry changing status, and quite possibly a catchy moniker with 8 companies could have worked? There was a period of relative decline in Netflix, as the company fought to turn profit, and hit the expectations of markets in light of growing competition. The days of these questions seem long behind us.

The ascent of Netflix shares, set against the -34.76% seen by Tesla shareholders only put this move further into question, but inclusion or not, share prices do not ride on this. There are wider fundamental factors at play, that has the analyst community rather taken with NFLX in recent times.

Whether these insights align with the optimism currently held by many in the financial community remains to be seen come Thursday's closing bell, but we will be glued to the screen, whoever is streaming.