Netflix Inc (NASDAQ:NFLX, ETR:NFC) continues to dominate the streaming landscape with a virtually “insurmountable lead,” according to analysts at Wedbush.
In a note released following the streaming giant’s 3Q earnings, Wedbush points to Netflix’s competitive moat, bolstered by its success in password crackdown measures and the growing strength of its advertising tier, which is expected to drive revenue growth for the next several years.
Analysts reiterated their Outperform rating and raised the price target to $800 from $775 on Netflix stock.
“The most significant advantage of the ad tier so far is that it limits churn,” Wedbush wrote, adding that it “lowers pressure on adding new subscribers.”
They see Netflix positioned to accelerate ad tier revenue, becoming a primary growth driver by 2026, as the company improves advertising solutions, targeting, and partnerships.
Wedbush also praised Netflix’s ability to manage content spending, saying the company has “reached the right formula with global content creation, balancing costs, and increasing profitability.” With content spending approaching a steady level, Wedbush expects Netflix’s operating margins to continue expanding, helping drive free cash flow growth.
The firm is optimistic about Netflix’s guidance for Q4 2024 and 2025. “Netflix provided solid guidance for Q4:24 and guided to strong growth in 2025,” they noted, pointing to healthy margins and strong free cash flow.
With its subscriber base nearing 300 million households, Netflix is well-positioned to invest in targeted content, with Wedbush estimating that EPS could more than double between 2023 and 2026, supporting the stock’s premium valuation.