On Thursday, Citi reaffirmed its Neutral rating on Netflix (NASDAQ:NFLX) shares, maintaining a price target of $660.00. The firm is anticipating Netflix to unveil its second-quarter results for 2024 after the market closes, with projections of net additions slightly surpassing analyst estimates but falling short of investor expectations. The focus for investors is expected to shift towards Netflix's advertising-supported tier, strategies for sports content, and how the company allocates its capital.
Netflix's stock has seen significant growth, with an approximate 45% increase since the start of the year and a 24% rise following the first-quarter results of 2024. Despite this upward trend, Citi remains cautious as the second-quarter financial release approaches.
In the upcoming earnings report, set for release after the market closes, the company's performance in terms of subscriber growth will be scrutinized. Netflix has been expanding its offerings, adding an ad-supported subscription tier and exploring sports content, which are areas of interest for both analysts and investors.
Citi's stance comes at a time when Netflix's stock has been performing well in the market, suggesting a level of prudence from the financial services firm despite the positive momentum in Netflix's share price.
The price target set by Citi indicates the firm's expectation for the stock's potential to reach $660.00, a figure that has been maintained even as Netflix prepares to share its latest financial achievements and strategic updates.
In other recent news, Netflix's revenue prospects have been highlighted by several Wall Street firms, leading to raised share targets. A Wall Street firm increased Netflix's price target to $775, up from $725, based on an anticipated surge in new subscribers and revenue from the advertising-supported video on demand (AVOD) service. Argus also raised Netflix's share target to $767, citing the company's strategic move into live sports programming, specifically its National Football League (NFL) deal. Loop Capital upgraded Netflix's share target from $700 to $750, noting strong viewership trends and potential revenue boosts from an anticipated price hike.
In terms of labor developments, the International Alliance of Theatrical Stage Employees (IATSE) secured a tentative three-year agreement with the Alliance of Motion Picture and Television Producers (AMPTP), which includes significant pay increases and terms regulating AI use in the industry. This deal affects major industry players, including Netflix.
Lastly, Magnite, a provider of advertising technology solutions, saw its share target raised to $15 from $13 by Evercore ISI, following the announcement of a partnership with Netflix. This collaboration is expected to significantly boost Magnite's connected TV revenue. These are the recent developments in the companies.
InvestingPro Insights
As Netflix gears up to release its Q2 2024 earnings, investors and analysts alike are closely monitoring the company's financial health and strategic initiatives. According to recent data from InvestingPro, Netflix is trading at a P/E ratio of 43.44, signaling a potentially attractive valuation relative to its near-term earnings growth. With a PEG ratio of 0.84, the company's growth rate is also noteworthy, suggesting that the stock may be undervalued when considering its earnings growth.
InvestingPro Tips highlight that Netflix is a prominent player in the Entertainment industry and that its cash flows can sufficiently cover interest payments, which is crucial for maintaining financial stability. Additionally, the company's revenue growth over the last twelve months stands at 9.47%, with a quarterly increase of 14.81% in Q1 2024, reflecting its ability to expand its revenue streams effectively.
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