Netflix Inc (NFLX  ), will be reporting its fourth-quarter (Q4) earnings on Jan. 23. Wall Street expects $2.22 in EPS and $8.71 billion in revenues as the company reports after market hours.

The video-on-demand company had around 247.2 million paid subscribers worldwide as of Q3 of 2023. Here's what analysts will be focusing on, and how the stock currently maps against Wall Street estimates.

Netflix Investment Thesis: Netflix stands as a dominant player in the streaming services sector. The stock has been bolstered by recent improvements in paid memberships and healthy operating profits, up over 50% over the past year. The 148-day-long Hollywood writers' strike coming to an end on Oct. 10, 2023 also provided the necessary Q4 boost to the stock.

While Q3 2023 figures were encouraging, potential challenges lie in reduced per-member revenue and higher costs.

The company's strategic moves in 2023 have positively impacted growth. These include a crackdown on password sharing and the introduction of advertisement-based subscriptions. Despite a dip in ARM to $34.56, the steps taken to achieve higher growth, bode well for future cost management.

The outlook for 2024 is optimistic, supported by strong financials and market multiples. The potential impact on operating profits from improved packages for writers and seasonality is a consideration. However, the overall market positioning and historical performance appear to remain in favor of Netflix.

Q4 Analysts' Focus: Analysts will be closely monitoring two things - the impact of reduced per member revenue, and higher costs on the streaming giant's performance. The effectiveness of measures taken in 2023, like addressing password sharing and introducing new subscription options, will be a key area of scrutiny as well.

Analysts are particularly interested in how Netflix plans to navigate challenges such as lower ARM and potential effects on operating profits, given improved packages for writers and seasonality.

Ratings & Consensus Estimates: Consensus analyst ratings on Netflix stock currently stand at a Buy with a price target of $452.11. Recent reports from analysts who reviewed the stock in January 2024 have their price targets between $425 and $600.

NFLX Price Action: Netflix stock was trading at $488.25 at the time of publication.