The case for Netflix Inc (NASDAQ:NFLX) bulls is getting stronger, analysts at Oppenheimer argued in a note to clients Friday, upping their price target to $600 from $475 and maintaining their Outperform ratings.
Netflix stock climbed 0.5% Friday afternoon to $494.80.
A key reason for the big price target bump is rising monthly active users in its advertising tier. On Wednesday, Netflix advertising president Amy Reinhard said the company saw more than 23 million active users in its ad tier last month, up from 15 million in November and 5 million in May.
That’s “indicating [an] accelerating pace of ad subs,” the analysts wrote. “Near-term, the acceleration suggests 4Q net adds above guidance/Street. Over the medium-term, we believe the pace of acceleration suggests plenty of room for sub growth in 2024”
Oppenheimer upped its net add projections to 10 million for the fourth quarter and 24 million for 2024, compared to prior estimates of 9 million and 21 million, respectively. The consensus Street estimates are 9 million and 18 million, respectively, the firm noted.
“While accelerating sub growth is positive, the faster NFLX reaches scale in advertising, the faster [average revenue per member] levels reset higher,” the analysts added.
Looking ahead, Oppenheimer projects $6 billion of ad revenue in 2025.