JPMorgan Bullish on Netflix as Streaming Giant Hits Milestone Subscribers
JPMorgan reaffirmed its bullish stance on Netflix, maintaining an Overweight rating and setting a price target of $610. The investment firm’s optimism stems from Netflix’s impressive reach, boasting 260 million households subscribed and an average of two hours of daily viewing per user. With a diverse range of content offerings, Netflix is solidifying its position as the go-to platform for long-form video content worldwide.
Netflix’s strong performance in the fourth quarter fueled a 14% surge in its shares, outpacing the broader market’s 3% rise during the same period. JPMorgan predicts accelerated revenue growth, margin expansion, and multi-year free cash flow growth for the streaming giant in 2024. The introduction of the Paid Sharing feature is expected to contribute to a net addition of around 30 million subscribers in 2023 and become a standard business operation.
For future growth, JPMorgan underscores the importance of expanding the Ad tier, with plans for price hikes in various markets. The firm believes that adjustments in plans, pricing, marketing efforts, and partner deals will drive substantial growth. Despite concerns about revenue sustainability and valuation, JPMorgan remains confident in Netflix’s organic growth prospects, the impact of Paid Sharing and price increases, consistent margin expansion, and the company’s strong position in the streaming market.
JPMorgan has set a price target of $610 for Netflix by December 2024, based on approximately 28 times the estimated 2025 GAAP earnings per share of $21.65, equivalent to about 31 times the estimated $8.5 billion free cash flow in 2025. The investment firm projects an average growth of nearly 15% for revenue, 27% for operating income, and close to 35% for GAAP EPS in 2024 and 2025. With JPMorgan’s positive outlook, Netflix’s future appears promising in the ever-evolving streaming landscape.
Analyst comment
Positive news: JPMorgan is bullish on Netflix and expects the streaming giant to experience accelerated revenue growth, margin expansion, and multi-year free cash flow growth. The introduction of the Paid Sharing feature is predicted to add around 30 million subscribers in 2023. JPMorgan believes that price hikes, expanding the Ad tier, and strategic partnerships will fuel substantial growth. The investment firm has set a price target of $610 for Netflix by December 2024, indicating confidence in the company’s future prospects.
