Netflix Inc (NASDAQ:NFLX, ETR:NFC)'s third quarter earnings report prompted a mixed but optimistic response from Wall Street analysts, who believe the company’s long-term outlook remains intact despite near-term uncertainty.
While results and guidance were broadly in line with expectations, analysts at Jefferies, Wedbush, and UBS highlighted margin expansion and rapid growth in advertising as evidence of Netflix’s strengthening business fundamentals.
Bull thesis
Jefferies described the quarter as “mixed,” noting that while 17% year-over-year revenue growth met expectations, the 33.6% operating margin excluding one-time expenses came in two percentage points ahead of the Street.
“The lack of financial year 2026 guidance should create continued uncertainty around next year’s growth trajectory,” they noted, but added that “the results don’t change our bull thesis.”
Jefferies highlighted the 17% revenue increase in the US and Canada, the fastest since the second quarter of 2024, and attributed it to the success of US price increases.
The analysts also pointed to record ad revenue in Q3, a doubling in US upfront commitments and expectations that advertising revenue will more than double in 2025 as positives.
Jefferies maintained its 'Buy' rating and $1,500 price target on the streaming platform.
“We believe Netflix will remain the dominant player in streaming and expect revenue and free cash flow to grow at 10%+ and 15%+ compound annual growth rates (CAGRs) over the next five years, respectively,” the firm wrote.
‘Compelling’ ad growth story
Wedbush took a similar long-term view but acknowledged that the quarter “underwhelmed investors after several quarters of phenomenal results.”
They see Netflix’s ad growth story as “compelling,” adding that “Netflix is positioning for substantial growth in global advertising, and that should not be overlooked.”
Wedbush said its data indicate that “subscriber growth continues, subscribers absorbed the price increases with little resistance, and Netflix’s advertising engine is beginning to hum.”
The analysts expect ad revenue to become Netflix’s primary revenue driver beginning in 2026, with significant opportunities in 2027.
“Netflix can accelerate ad revenue contribution for the next several years by adding and improving live events, enhancing targeting and interactivity, expanding ad partnerships, and adding purchasing capabilities,” they wrote.
Wedbush reiterated its ‘Outperform’ rating but lowered its price target to $1,400 from $1,500 to reflect “a slightly slower pace” in the second half of 2025.
‘Secular winner’
UBS called Netflix “a secular winner” and said the company’s “solid” Q3 results support that view.
The firm highlighted that “Q3 was the best quarter for ad sales to date” and that management now “expects ad revenue to more than double in 2025.”
“Netflix’s price per hour of viewership sits at the lower end of peers, supporting its ability to enhance monetization,” they wrote.
They also noted that management is “focused on reinvesting in the business organically and through selective M&A.”
UBS reaffirmed its ‘Buy’ rating and $1,495 price target, saying “secular trends and competitive dynamics support Netflix’s ability to drive monetization and operating leverage.”
Shares of Netflix pulled back post-earnings, down 10.2% at about $1,115 in the early afternoon on Wednesday.