Streaming giant Netflix Inc NFLX has multiple drivers to help push revenue growth in 2024 and 2025, an analyst says a month after second-quarter financial results.
The Netflix Analyst: JPMorgan analyst Doug Anmuth reiterated an Overweight rating and a $750 price target.
The Analyst Takeaways: Netflix could have further margin expansion and strong free cash flow thanks to multiple growth drivers, Anmuth said in a new investor note.
The analyst said Netflix has less exposure to higher capex spending and the softening consumer, which have been common themes across technology companies' earnings reports.
"NFLX will still spend ~$17B on cash content this year, but it is not tied to heavy AI spending," Anmuth said.
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The analyst said subscription services such as Netflix and Spotify could be more resilient during "periods of macro pressure."
"In terms of macro and the consumer, while NFLX is certainly not immune, we believe the service represents compelling value, even with ongoing price increases."
For the advertising market, Netflix could control its own destiny more than other peer companies, Anmuth added.
Anmuth said paid sharing and organic growth in key regions like EMEA and APC could help boost subscriber figures in coming quarters.
Another future catalyst for Netflix will be a rise in cost for the ad-supported plan.
"Importantly, NFLX left the door open at 2Q earnings for a potential price increase in the Ad Tier, which we believe now becomes more viable since Disney+ is increasing $2 to $9.99/mo."
Live events like the boxing match between Jake Paul and Mike Tyson and Netflix's two Christmas Day NFL games could help drive subscribers and increase the company's scale, Anmuth said. The analyst sees Netflix pushing for more live sports content in the future.
"More specifically, we believe NFLX's global scale, strong engagement & diversified content will push NFLX toward becoming the default choice for how users consume TV, film, & other long-form content."
NFLX Price Action: Netflix stock is up 2.09% to $646.36 on Tuesday versus a 52-week trading range of $344.73 to $697.47. Netflix stock is up 31.5% year-to-date in 2024.
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