On Wednesday, Loop Capital made a bullish move on Netflix (NASDAQ:NFLX), increasing the stock's price target to $800 from the previous $750, while maintaining a "Buy" rating. The firm's decision is based on a positive assessment of Netflix's subscriber and revenue growth, which is expected to exceed the consensus. According to Loop Capital, several factors contribute to this optimistic outlook, including robust viewership trends and less negative currency impacts.
The analyst at Loop Capital highlighted the potential for a price increase in Netflix's standard tier, likely to occur before the company's two NFL games scheduled on Christmas day and the release of "Squid Games 2" in late December. While the introduction of an advertising tier is moving slower than initially expected, the firm remains confident in Netflix's ability to capitalize on its strong viewership and future sports programming, projecting it to be a significant contributor in the coming years.
Netflix's stock performance has been impressive, with a 45% year-to-date gain compared to the S&P 500's 23% increase. Despite considerable insider selling and a high valuation at 30 times Loop Capital's 2025 earnings per share estimate, the firm believes Netflix's leading position in the streaming market continues to strengthen.
Loop Capital anticipates further consolidation within traditional studios and a move towards more rational pricing, which could result in a more profitable industry environment. Netflix has successfully maintained its share of total U.S. TV consumption even with increased competition over the past few years.
The firm projects low-double-digit revenue growth for Netflix, attributing this to a balance between unit growth and average pricing, as well as continued margin expansion driven by economies of scale and a more rational competitive landscape.
The firm expects Netflix's earnings per share to grow in the high twenties percentage-wise over the next five years. Loop Capital suggests there could be a tendency for upward revisions in the future and reaffirms its confidence in Netflix by reiterating the "Buy" rating and raising the price target.
InvestingPro Insights
Recent data from InvestingPro reinforces Loop Capital's bullish stance on Netflix (NASDAQ:NFLX). The streaming giant's market capitalization stands at an impressive $302.98 billion, reflecting its dominant position in the entertainment industry. Netflix's revenue growth remains strong, with a 13.0% increase over the last twelve months and a notable 16.76% quarterly growth in Q2 2024. This aligns with Loop Capital's expectations of robust subscriber and revenue growth.
InvestingPro Tips highlight Netflix's financial strength and market performance. The company is trading near its 52-week high, with a remarkable 95.66% price return over the past year. This exceptional performance supports Loop Capital's view on Netflix's leading position in the streaming market. Additionally, Netflix operates with a moderate level of debt, and its cash flows can sufficiently cover interest payments, indicating financial stability as it pursues growth strategies.
For investors seeking a deeper understanding of Netflix's potential, InvestingPro offers 13 additional tips, providing a comprehensive analysis of the company's financial health and market position.
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