Streaming giant Netflix Inc
An analyst is raising the price target on shares and citing several catalysts that could help boost the price of Netflix stock.
The Netflix Analyst: Oppenheimer analyst Jason Helfstein has an Outperform rating and raises the price target from $615 to $725.
The Analyst Takeaways: Tailwinds for Netflix include converting shared customers to paid plans and the growth of advertising for the cheaper plans, Helfstein said in a new investor note.
"We are forecasting 2024 ARM (average revenue per member) +4% y/y, following the October '23 price increases in US/UK/France and the gradual phase out of Basic, with no material improvement in ad monetization," Helfstein said.
The analyst said there could be a "high likelihood of upside" to net subscriber additions compared to Street consensus estimates.
"We see path to subscribers being potentially 17M higher than Street estimates over the next three years, capturing 60% of 100M paid sharing opportunity."
The analyst highlights Netflix's previously announced price increases coming to U.S., UK and France, which make up an estimated 41%, 6% and 5% of revenue respectively.
Improving advertising monetization could also help boost the average revenue per member for the ad-supported plans.
Helfstein said Netflix has a huge content advantage over peers, which could help with subscriber growth. A focus on profitability by streaming peers could also lead to subscriber growth for Netflix, as other platforms cut their content spending.
"Furthermore, studio licensing more content to NFLX, as NFLX monetizes better than Studios owned services."
The analyst said concerns of competition shouldn't be a big focus.
"We believe NFLX's dominance will continue, given its clear advantage in producing high-engagement content and monetizing that content more effectively than peers."
NFLX Price Action: Netflix shares are up 1% to $605.42 on Tuesday versus a 52-week trading range of $285.33 to $624.42. Shares of the streaming giant are up over 100% over the last year.
