Netflix Inc (NASDAQ:NFLX, ETR:NFC) is deserving of trading at a premium valuation despite shares having sunk more than 10% in the last month, analysts at Oppenheimer said in their latest report.
Oppenheimer researchers said they were bullish on Netflix and believe the streaming service has the “best long-term visibility” within its coverage.
Analysts argued the US stock has clear revenue drivers all the way through until 2026 and can expect to benefit from subscriber tailwinds, price increases and advertising monetisation.
Further price rises have been touted for 2025, with analysts confident in its pricing power due to its content advantage.
Oppenheimer pointed to upcoming releases of series such as Squid Games, Cobra Kai and Emily in Paris as helping drive subscriber growth in the upcoming second half.
“While Netflix has already won the streaming wars, eventual consolidation will drive more viewership to Netflix, with ~12% viewing share likely up for grabs from consolidation driving margin leverage,” said Oppenheimer analysts.
Based on this strength, helped by growing revenue rises of 13% and operating expenditure growth of 7%, Oppenheimer believes Netflix will be able to deliver US$20 in free-cash-flow, which could be distrubuted through shareholder returns in the coming years.
Oppenheimer rates the stock an “outperform” and targets a US$725 share price target, a 15% premium to its current market value.