Netflix Stock Has 'Long Term Runway For Dominance In Streaming': Analyst Highlights 4 Key Catalysts

Streaming giant Netflix Inc NFLX gets a price target increase and call for a subscriber beat ahead of fourth-quarter financial results.

The Netflix Analyst: Macquarie analyst Tim Nollen reiterated an Outperform rating on Netflix and raised the price target from $795 to $965.

The Analyst Takeaways: Live sports and several highly anticipated content releases in the fourth quarter could lead to a strong subscriber figure, Nollen said in a new investor note.

"We estimate Netflix will finish 2024 with more than 33m sub adds globally, totaling 293m, and there is a decent chance it beats this given the popularity of the Paul/Tyson fight, two NFL Christmas games and the Squid Game 2 release," Nollen said.

The analyst reminds investors this is the last quarter Netflix will provide subscriber figures and highlights the key areas to watch going forward.

"The focus now shifts to better monetizing the ad tier, with likely live sports expansion and price increases boosting revenue and earnings."

Nollen estimates that advertising revenue will be $2 billion in 2025, $3 billion in 2026 and $4.5 billion in 2027. Price increases for the U.S. standard plan could also add around $600 million in annualized revenue each year.

In the report, Nollen dives into live events as a key driver for Netflix subscriber growth and retention and also for advertising growth.

Nollen estimates Netflix made money on the NFL Christmas games, the WWE contract and future Women's World Cups. The streamer could also bid on MLB and NFL rights as early as 2028.

"Netflix's current growth drivers set up a long-term runway for dominance in streaming."

Nollen highlights advertising tier growth, live events, upcoming price increases and intelligent content spending as the four keys to the Netflix story going forward.

On the subject of price increases, Nollen says Netflix's standard ad-free plan is less expensive than competitors like Max, Disney+, Hulu and Prime and has the most engagement, meaning churn could stay low with a higher monthly rate.

After landing rights to NFL games, the Tyson/Paul fight and WWE, Nollen doesn't think Netflix will slow down in its efforts to add live events.

"We expect Netflix to continue to acquire premium live content that will drive subscriber growth and retention, and importantly boost ad revenue."

Nollen said Netflix's push into live events could force pay TV subscribers out of the market.

"We expect events like the Christmas Day games and weekly WWE to put Netflix in a competitive position to gain more rights as it can distribute and monetize globally."

NFLX Price Action: Netflix stock trades at $839.41 on Monday at publication versus a 52-week trading range of $475.26 to $941.75. Netflix stock is up 74% over the last year.

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