Friday - Benchmark has raised the price target on Netflix (NASDAQ:NFLX) shares to $450 from $440, while maintaining a Sell rating. The adjustment is attributed to real-time currency model changes.
The firm acknowledges Netflix's effective management in expanding its advertising reach and introducing new content, such as NFL Christmas Day games and WWE Raw. Despite initial challenges with advertising scale and metrics, Netflix's recent report of 40 million global AVOD members, a significant increase from 23 million in January, was highlighted as a positive development.
Benchmark remains skeptical about Netflix's current valuation, suggesting it is not warranted even when considering Netflix as a high-growth technology company rather than a media entity.
Netflix's management has been focused on enhancing the platform's advertising capabilities and content offerings. The company's upfront presentation yesterday showcased its success in securing appealing new content, including exclusive coverage of NFL games on Christmas Day and WWE Raw events starting next year.
Additionally, Netflix has recently entertained its audience with unique programming like the Tom Brady roast.
Early advertiser frustrations regarding the scale of Netflix's advertising, as well as targeting and measurement issues, were addressed by the streaming giant.
Netflix's announcement of an increase in global AVOD membership to 40 million, up from 23 million in January, has helped alleviate these concerns. This growth in ad-supported viewership is seen as a potential factor in sustaining Netflix's share price momentum.
Despite the positive momentum in AVOD and paid sharing, Benchmark expresses caution. The firm references the sell-off following the first quarter of 2024 earnings report due to sales guidance and the decision to withhold actual member counts and Average Revenue per Membership (ARM) for the first quarter of 2025.
InvestingPro Insights
As Netflix (NASDAQ:NFLX) continues to evolve with new content and advertising strategies, real-time data from InvestingPro offers additional context for investors considering the company's prospects. According to InvestingPro, Netflix has seen a robust 79.59% return over the last year, reflecting investor confidence and market performance. This aligns with the company's reported surge in global AVOD membership, suggesting that their strategy may be resonating with both viewers and investors.
InvestingPro Tips highlight that Netflix is currently trading at a low P/E ratio relative to near-term earnings growth, with a PEG ratio of 0.74 as of Q1 2024, indicating potential for growth in relation to its earnings. Moreover, with 25 analysts revising their earnings upwards for the upcoming period, there appears to be an optimistic outlook on the company's financial performance. For investors seeking a deeper dive into Netflix's metrics and potential investment strategies, InvestingPro offers additional tips on their platform, which can be accessed with the coupon code PRONEWS24 for an extra 10% off a yearly or biyearly Pro and Pro+ subscription.
In terms of valuation multiples, Netflix is trading at a high Price / Book multiple of 12.31, which might warrant caution for value-focused investors. However, with the company's high return over the last year and the positive revisions by analysts, these metrics could be indicative of Netflix's commanding position in the entertainment industry and its growth trajectory. With 17 additional tips listed on InvestingPro, investors have access to a wealth of insights to inform their decisions.
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