Netflix Inc (NASDAQ:NFLX, ETR:NFC) continues to attract bullish sentiment from Wall Street analysts heading into the streaming giant’s first quarter earnings report due after US markets close.
The company is expected to report earnings per share of $5.73 on revenue of $10.5 billion, representing year-over-year growth of about 9% and 12%, respectively.
Analysts at Jefferies repeated their ‘Outperform’ rating and $1,150 price target on Netflix, highlighting that a US or global recession would have no material impact on the company.
“While Netflix could be exposed to macro weakness in the form of higher churn, weaker gross adds or trade down to cheaper plans, we see limited risk overall,” they wrote.
“Per a 2011 Stanford survey, consumers spend more time at home during economic hardship, with time spent watching TV increasing during last US recession (2008-2009) to 2.8 hours/day vs. 2005-2007's 2.6.”
Further, Netflix raised its prices in the US and Canada, which make up 45% of its revenue, in Janaury, before consumer concerns emerged.
“This price increase has therefore already been digested by the majority of consumers and represents approximately 5% 2025 growth, assuming no net adds,” Jefferies wrote.
They added that with the company no longer reporting subscriber additions and average revenue per member, investors will be forced to focus on revenue and operating income, which they believe should be resilient.
The analysts noted that engagement metrics remain solid. While Top-10 viewing hours in Q1 were up just 1% quarter-over-quarter, Nielsen data shows Netflix maintained a strong share of US TV viewing at 8.2% in February.
Targeting $1T valuation
Analysts at Bank of America believe Netflix has ample runway for continued growth driven by subscriber adds and further monetization opportunities.
A Wall Street Journal report that stated Netflix is targeting doubling its revenue by 2030 and reaching a $1 trillion valuation validates their bullish thesis, the analysts added.
“Amid recent market volatility, Netflix's strong subscription model with critical entertainment (which historically has performed well in a recession) has made the stock a defensive choice for investors and driven outperformance versus other technology/Magnificent 7 companies,” they wrote.
“Further, Netflix's advertising business, which is nascent, should be an incremental positive, not negative, even in a more challenging advertising backdrop. We expect shares to react positively to this longer-term outlook.”
The analysts reiterated their ‘Buy’ rating and $1,175 price target on Netflix ahead of its earnings report.
“[We] believe Netflix will be driven by continued positive subscriber and earnings momentum as well as drivers including evolving advertising and live opportunities,” they wrote.
“Supported by its world-class brand, leading global subscriber base, position as an innovator and increased visibility in growth drivers, we believe that Netflix should continue to outperform.”
Netflix shares traded up 0.4% at $965 before the release of its earnings report on Thursday.
- Updated with share price movement -