Netflix Inc (NASDAQ:NFLX, XETRA:NFC) reports second quarter earnings tonight, and two major brokerages are sticking with their bullish calls even as the stock has struggled this year.
Shares were little changed Thursday at $73.50, but that stability masks a rough 2026 for Netflix investors: the stock has fallen more than 20% year-to-date.
Jefferies reiterated its Buy rating and $110 price target, while Bank of America kept its own Buy rating and $125 price objective. Both firms see the pullback as a buying opportunity rather than a red flag, even as they acknowledge the market's patience is being tested.
Why the stock has struggled
Bank of America attributed the decline to investor worries about engagement trends, the potential impact of artificial intelligence on content creation, and rising competition following a wave of media mergers and acquisitions.
The bank pointed to history as a guide. Subscriber growth slowed sharply in 2022, and the stock fell more than 50% as a result, before Netflix responded with paid sharing and its ad-supported tier, moves that reignited growth.
A similar bout of margin concerns hit the stock in late 2023, only for another year of strong execution to follow. Management has "consistently demonstrated an ability to adapt to changing market conditions, execute effectively and create long-term shareholder value," the bank wrote.
What to expect from tonight's numbers
Jefferies doesn't expect a meaningful upside surprise in second quarter or full-year revenue guidance. It's forecasting constant-currency revenue growth of 12% year-over-year for both the second and third quarters, in line with Wall Street. The firm also doesn't expect Netflix to lift its full-year revenue outlook this quarter, citing soft third-party subscription data.
Bank of America is looking for largely in-line financial results, with investors more focused on the company's second-half outlook, engagement trends, and any commentary on acquisition appetite and broader strategic priorities.
On margins, Jefferies is a bit more upbeat, suggesting consensus estimates may be underestimating the benefit of Netflix's US price increase from late March while overstating the drag from Brazil-related tax comparisons. The firm thinks the company's full-year operating margin guidance of 31.5% could eventually move higher, though the timing is unclear.
Engagement remains the key swing factor
Both firms flagged engagement as the metric to watch. Jefferies expects first-half 2026 viewing hours to improve on the roughly 2% year-over-year growth seen in the second half of 2025, with third-party web traffic data pointing to stabilization rather than further weakness. Still, the brokerage doesn't think a modest improvement would shift the broader investment debate much, given tough content comparisons in the second half of 2026 and the FIFA World Cup as a potential distraction for viewers.
On the call, Jefferies expects investors to press for updates on US subscriber churn following recent price hikes, explanations for softer engagement, whether second quarter subscriber additions hit internal targets, and guidance on content spending beyond fiscal 2026.
The bear case, and why both firms aren't buying it
Bank of America laid out the risks bears are watching: slowing engagement, growing competition from YouTube and short-form video platforms, AI's potential impact on content creation, and uncertainty around a more acquisitive Netflix compared with its historical approach.
Even so, the bank believes Netflix still has a long runway for subscriber and advertising growth, backed by its global scale, expanding ad business, and strong balance sheet, factors it expects to keep supporting shareholder returns over time.
Jefferies, meanwhile, argued that even a stronger-than-expected quarter may not be enough to shift market sentiment given the lingering concerns around subscriber growth, M&A speculation and AI's perceived impact. But the firm isn't backing off its long-term thesis, calling Netflix "an approximately 20% multi-year EPS compounder" trading below its historical valuation.