Analyst firm CFRA bumped the target price of Netflix stock up from $225 to $310 per share, resulting in a 6% increase for the streamer’s stock following an upgrade from “Sell” to “Buy.”
With expectations for December Netflix originals like “Emily in Paris,” “The Witcher: Blood Origin” and “Glass Onion” to do well for the platform, Global director of research at CFRA and industry analyst Kenneth Leon explained the $85 boost in a research note on Wednesday.
“We revised our valuation and apply a wider risk premium for the leading media video streaming company,” said Leon. “We raise our target price by $85 to $310, applying a forward TEV/EBITDA of 21.4x, still well below historical levels, said Leon, mentioning CFRA kept its EPS estimates for Netflix at $10.35 in 2022 and $10.95 in 2023. “Our EBITDA forecast is $6.3b in 2022, $7.0b in 2023, and $8.6b in 2024. Catalysts ahead for NFLX are new revenue streams from advertising, new ad-pay plans ($6.99/month), and new paid sharing efforts to better control sharing of subscription accounts.”
The note continues: “Besides NFLX’s best-in-class platform for ease in search and personalization, we expect new original content like Emily in Paris, Glass Onion with James Craig, and Blood Origin to benefit subscription and reduce churn. We agree that NFLX does not need a major sports event or sponsor, which risks a big loss leader. We think it will be difficult for competitors to catch NFLX, one of the few profitable streaming providers with global scale.”
Despite this being a tough year for the streamer, losing hundreds of thousands of followers and receiving pushback for implementing an ad-supported subscription tier, Netflix was the most-watched streaming platform with more spots in the Nielsen Top 10 than any other streaming platform combined.
Netflix is expected to share their full 2022 earnings report on Jan. 19, 2023.