Netflix's Advertising Strategy Promises Big, with 40M Ad-Supported Viewers and Unique Ad Integration Plans, Analysts Says After Event

Oppenheimer analyst Jason Helfstein reiterated an Outperform rating on Netflix Inc. NFLX and a price target of $725.

On Wednesday, Netflix hosted its first live Upfront event, showcasing a very robust content slate, access to 40 million ad-supported viewers, and forthcoming integrations with The Trade Desk, Inc TTD, Alphabet Inc GOOGL DV360 and Magnite, Inc MGNI and also, launching an in-house ad-buying platform by the end of 2025.

Helfstein expected Netflix’s rapidly expanding user base, which is more engaged vs. competitors, paired with advanced advertising targeting and measurement capabilities, to make it a must-have for advertisers in the coming years. 

Also Read: Netflix To Stream 2 NFL Christmas Day Games: Analyst Sees Strong Growth Potential

The analyst said that while the event showed the potential for a large ad business, investors need to be patient with the ad revenue ramp. Helfstein projected second-quarter revenue and EPS of $9.5 billion and $4.70.

Benchmark analyst Matthew Harrigan maintained Netflix with a Sell and raised the price target from $440 to $450.

As conveyed in its Upfront presentation, Harrigan said that Netflix management continues to execute well in advertising and injecting compelling new content, including NFL Christmas Day games and WWE Raw next year. 

Despite some early advertiser frustrations with scale, targeting, and measurement, Netflix announced 40 million global AVOD members – up from 23 million in January. The analyst noted the current valuation can be justified even by valuing Netflix as a Nasdaq 100 high-growth technology name and disregarding its media stock character. 

Current quarterly AVOD and paid sharing momentum may allow Netflix to maintain its share price level as investors focus on momentum more than valuation. Harrigan projected second-quarter revenue and EPS of $9.57 billion and $4.82.

Rosenblatt analyst Barton Crockett maintained Netflix with a Neutral and raised the price target from $540 to $554.

Crockett said Netflix ran a power play through the middle of pay TV’s defensive line by announcing a new Christmas Day NFL deal at its inaugural in-person advertising upfront. He noted that the success is reasonably discounted in forward valuation multiples in the 30s.

Piper Sandler analyst Matt Farrell reiterated a Neutral rating on Netflix with a price target of $600.

Farrell attended Netflix’s recorded Upfront presentation and management Q&A in New York City. Overall, he walked away with a better appreciation for Netflix’s advertising opportunity, particularly its value proposition to advertisers. Farrell noted the programmatic partnerships and the internal ad stack announcement were incremental to the story.

Management is still focused on driving scale. Still, the analyst said the event clarified how it plans to monetize the growing inventory levels. On the content side, sports stuck out significantly, particularly as it relates to live events and sports-adjacent content, the analyst said. He remained in the early days of this multi-year journey with the broader goal of driving engagement, revenue, and profits.

Farrell projected second-quarter revenue and EPS of $9.44 billion and $4.69.

KeyBanc analyst Justin Patterson reiterated an Overweight rating on Netflix with a price target of $705.

Patterson walked from his meeting with leadership encouraged by Netflix’s AdTech strategy. The analyst noted that In-house AdTech investments are centered around personalization and ad format innovation, and third-party DSPs will be used as part of a hybrid sales approach to fill inventory.

As connected TV proves its performance capabilities over the next two to three years, Netflix believes connected TV (CTV) can capture a more meaningful portion of linear TV dollars, he added.

Needham analyst Laura Martin reiterated Netflix with a Buy and a $700 price target.

Price Action: NFLX shares were up 1.65% at $620.61 at the last check Friday.

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