Netflix Analyst Say It's 'Only Investable' Media Stock, Projects $150 Million NFL Christmas Day Boost

Netflix Inc NFLX stock has more upside thanks to live events, an analyst says ahead of the company's highly anticipated NFL Christmas Day games.

The Netflix Analyst: Oppenheimer analyst Jason Helfstein reiterated an Outperform rating on Netflix and raised the price target from $825 to $1,065.

Read Also: Netflix CEO Says Paul-Tyson Fight ‘Really Phenomenal,’ Strong Demand For NFL Game Advertising

The Analyst Takeaways: With a dominant position in the streaming market and monetization upside coming from live events, Helfstein sees more upside for Netflix ahead.

"NFLX remains the only investable mainstream media stock," Helfstein said in a new investor note.

Helfstein said Netflix's competition is "continuing to weaken," which could help Netflix with churn and driving down content costs.

"Near term, we expect positive commentary from NFL Christmas Day games similar to Paul/Tyson, driving sentiment into 4Q earnings."

With a bigger and better library, Netflix has been able to have lower churn than media peers, the analyst said. Netflix's churn of around 2% is much lower than the 6% across the industry, which has elevated from 4% in 2021 with more companies entering the streaming space.

An example of the churn the analyst illustrates is with NFL and Olympics content for Comcast Corporation CMCSA and Paramount Global PARA PARAA led to growth in streaming subscribers, but also saw 2-month cancellation rates of 30% and 35% respectively.

"We think NFLX original content/library should drive stronger retention."

The Mike Tyson vs. Jake Paul boxing event was watched by 108 million households, which is the largest live event excluding Super Bowls since President Richard Nixon's resignation, according to the report.

While Netflix's Christmas Day NFL games won't break the boxing viewership, they could bring in $75 million in advertising revenue each for a total of $150 million, Helfstein estimates. The analyst calls the games a "free acquisition tool," based on the media reports Netflix paid $150 million to have the rights to the Christmas Day games.

"We now expect live events will drive stronger ad-tier growth, but expect significant advertiser demand once capabilities are built-out."

The analyst estimates Netflix has a $2.2 billion advertising opportunity annually for live events based on $223 million per live event and 10 events per year in the future.

"Therefore, on top of a strong subscriber acquisition tool, live event advertising could also become meaningfully incremental to NFLX."

Consolidation in the media space under a new White House administration could also be an item for Netflix investors to watch, Helfstein said. The impact would mean less competition for content and better margins for the company.

"We believe NFLX's dominance will continue, given its clear advantage in producing high-engagement content and monetizing that content more effectively than peers."

NFLX Price Action: Netflix stock is up 0.2% to $921.28 on Monday, versus a 52-week trading range of $461.86 to $941.75. Netflix stock is up 97% year-to-date in 2024.

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