Netflix Inc (NASDAQ:NFLX) has held onto its ‘Outperform’ recommendation from analysts at Oppenheimer but with a lower price target following comments from the company’s chief financial officer (CFO) at a recent competitor conference.
The analysts reduced their price target for the stock to $470 from $515, noting that it has declined by roughly 12% since the September 13 conference, versus a fall of about 4% for the Nasdaq.
Its shares traded 0.1% down at $383.66 by noon on Friday.
At the Bank of America Conference, Netflix CFO Spender Neumann noted the negative effect of the prolonged strike by Hollywood writers and actors, saying it wasn’t good for business.
He also spoke about the company’s fledgling advertising operation and how Netflix is rolling out an ad-supported tier over multiple quarters, with a healthy proportion of accounts moving in that direction.
The CFO is also “not expecting future operating leverage of 300bps” going forward, the Oppenheimer analysts noted. As a result, they lowered their estimates for Netflix’s GAAP operating income for 2024 and 2025.
“While we believe comments are not intended to be guidance, Opco/other bulls had to take notice, given our prior 279bps/343bps improvement,” the analysts wrote.
Justifying the ‘Outperform’ rating, the analysts said: “We continue to believe investors are underestimating the long-term tailwinds to subscribers/revenue from paid sharing/advertising, plus potential near-term benefit of Hollywood strikes. We continue to see a clear path back to double-digit revenue growth on subscribers and ARM (average revenue per membership).”
“Lastly, NFLX remains the dominant name in media,” the analysts added.
Contact the author at stephen.gunnion@proactiveinvestors.com