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Netflix raised at Bernstein, ‘still not late to the party’

by January 24, 2025
written by January 24, 2025

Investing.com — Bernstein analysts upgraded Netflix (NASDAQ:NFLX) to Outperform from Market-Perform, raising the price target to $1,200 from $975, citing sustained subscriber growth and improving margins.

Despite its recent rally, Bernstein insists, “it is expensive only if you believe in consensus EPS of $30 for 2026,” adding that Netflix’s performance continues to exceed expectations.

Subscriber growth remains a key driver for Netflix, with the company achieving a 13% CAGR over the past five years and 16% YoY growth in 2024. 

Bernstein projects another year of double-digit growth, forecasting Netflix’s subscriber base to exceed 330 million by 2025. International markets, which remain underpenetrated, offer significant upside, especially with the success of Netflix’s ad-supported tier and regional content strategies.

The report also highlights Netflix’s Average Revenue per Member (ARM). While FX headwinds and discounted CPM rates for its ad-supported tier have diluted ARM growth, Bernstein anticipates improvement, particularly following upcoming price hikes in the U.S. 

The firm believes better advertising market recovery or a faster shift from linear dollars to streaming could further boost revenue.

Netflix’s margins are considered another standout. Bernstein notes a 35% improvement in content efficiency, with revenue per dollar spent on content rising from 1.7 to 2.3 between 2021 and 2024. 

Investments in local-language and licensed content, particularly in regions like Korea, have driven global engagement. Additionally, the firm says operational leverage has reduced SG&A expenses as a percentage of revenue, with cost efficiencies expected to continue.

Bernstein concludes that while Netflix faces open questions about long-term growth in areas like sports and gaming, its current trajectory supports the upgrade. “There are plenty of eyeballs left to entertain,” they added, reinforcing confidence in the stock’s outlook.

 

This post appeared first on investing.com
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