Goldman Sachs' equity research team, led by Eric Sheridan, has upgraded video streaming platform Netflix
The firm also raised the price target from $230 to $400, citing Netflix's current operating performance and positive momentum heading into 2024 and, eventually, 2025. Still, the revised price target is 9% lower than the current stock price.
The neutral rating recognizes the limited visibility into the path to a significant upside, analysts said in the note. However, the likelihood of underperformance in the coming quarters has declined for Netflix.
Factors Influencing Netflix's Recent Performance
Los Gatos, California-based Netflix is up 50% year to date, outperforming the Nasdaq 100 Index, as tracked by the Invesco QQQ Trust
According to Goldman Sachs, Netflix management has exceeded expectations by successfully implementing its password crackdown initiative. The company has also regained content creation momentum, mitigating any post-pandemic growth headwinds.
Goldman believes Netflix will report subscriber performance that exceeds Street expectations when it releases its second-quarter results on July 19.
The Street's consensus estimates an earning-per-share of $2.86 for Q2 2023, flat from Q1 2023 but down 5% from Q2 2022. Netflix's revenues are expected to rise to $8.27 billion, up 1.1% from Q1 2023 and 3% from Q2 2022.
