On Tuesday, KeyBanc Capital Markets expressed confidence in Netflix (NASDAQ:NFLX)'s potential to outperform the S&P 500 into 2025, leading to an increase in the streaming giant's price target. The firm's analyst has raised the price target to $1,000 from the previous $785 while maintaining an Overweight rating on the company's shares.
The analyst highlighted that Netflix's shares have previously peaked at approximately 9 times the enterprise value to sales ratio (EV/S) for the next twelve months (NTM), which is the current level.
Despite this, the firm believes there are multiple factors that signal Netflix's shares can continue to perform strongly. These factors include a decrease in competitive intensity, the introduction of live events to drive engagement, and the expectation that Netflix's revenue and earnings per share (EPS) growth will remain resilient than that of its peers.
InvestingPro data shows Netflix maintaining strong revenue growth of 14.8% with an EPS forecast of $20.33 for FY2024, supporting this positive outlook. For deeper insights into Netflix's valuation metrics and growth potential, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
Furthermore, KeyBanc anticipates that Netflix will generate significant EPS and free cash flow (FCF) in the coming years. This financial strength is expected to provide a more substantial valuation floor than Netflix has had in the past. The firm's revised price target of $1,000 is based on a 32.5 times estimated P/E ratio for the year 2026.
The analyst's comments also suggest that while the current valuation reflects the recent positive momentum in Netflix's share price, the company's strategic moves and financial outlook justify the raised price target. With the Overweight rating unchanged, KeyBanc's stance indicates a bullish outlook on the stock's future performance relative to the market.
In other recent news, Netflix has made significant strides in expanding its offerings and sustaining its growth. The streaming giant has secured exclusive US rights to broadcast the 2027 and 2031 FIFA Women's World Cups, marking its first complete rights acquisition for a major sports event. This partnership is set to enhance the profile of women's football and provide comprehensive coverage to fans.
Netflix's financial prospects have also been positively reviewed by UBS, which anticipates a 12.3% three-year compound annual growth rate in revenue and a 24% CAGR in operating income through 2027. This outlook is supported by sustained subscriber momentum, higher monetization, and strong operating leverage and free cash flow conversion.
Meanwhile, Loop Capital has downgraded Netflix from Buy to Hold, reflecting the belief that factors previously giving Netflix a competitive edge have now been largely incorporated into the stock value. In contrast, Oppenheimer maintains an Outperform rating on Netflix, citing the potential for higher monetization and subscriber estimates as the company demonstrates its capacity to host live events.
Netflix has scheduled the release of its Q4 2024 financial results for January 21, 2025. The company has also revised its parental leave policy, moving away from unlimited time off during the first year of a child's life.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.