Goldman Sachs' equity research team, led by Eric Sheridan, has upgraded video streaming platform Netflix (NASDAQ: NFLX) from Sell to Neutral.
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 (NASDAQ: QQQ), which is up 40%.
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.