On Monday, BMO Capital Markets sustained a positive outlook on Netflix (NASDAQ:NFLX) shares, increasing the price target to $1,200 from the previous $1,175, while keeping an Outperform rating on the stock. Currently trading at $1,001.90 with a market capitalization of $426 billion, Netflix has shown remarkable momentum. According to InvestingPro data, 13 analysts have recently revised their earnings estimates upward, reflecting growing confidence in the company’s prospects. The adjustment comes in light of Netflix’s recent advancements in advertising and expected margin expansion.
The streaming giant has introduced its Ad Suite in the United States on April 1, with plans to expand the service internationally starting in the second quarter of 2025. BMO Capital’s analyst noted that Netflix management anticipates a doubling of ad revenue growth in 2025. With InvestingPro forecasting 13% revenue growth for FY2025, and the company maintaining a perfect Piotroski Score of 9, the fundamentals appear strong. The analyst believes that the ad-supported video on demand (AVOD) tier will gain traction through increased user engagement, pricing strategies, and the integration of programmatic and AI technologies anticipated to roll out in 2026 and beyond.
According to the analyst, these developments are likely to contribute to the company’s financial performance and justify the raised estimates and price target. The introduction of the Ad Suite is seen as a significant move for Netflix, which has historically relied on subscription-based revenue. The addition of an ad-supported tier is expected to create a new revenue stream and attract a broader audience.
The optimism expressed by BMO Capital Markets reflects confidence in Netflix’s strategy to diversify its revenue and strengthen its market position. The company’s focus on enhancing its advertising capabilities and the potential for margin growth are key factors influencing the analyst’s positive rating and higher price target.
Netflix’s stock performance will be closely watched by investors as the company continues to evolve its business model and explore new avenues for growth. The stock has delivered an impressive 75% return over the past year, while maintaining an "GREAT" financial health rating according to InvestingPro. With the anticipated expansion of its advertising platform and technological advancements on the horizon, Netflix is positioning itself to capitalize on the evolving media landscape. For deeper insights into Netflix’s valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro, which covers over 1,400 top US stocks.
In other recent news, Netflix’s first-quarter earnings report for 2025 showcased revenues and operating income exceeding Piper Sandler’s forecasts by 1% and 13%, respectively. Piper Sandler subsequently raised its price target for Netflix to $1,150, maintaining an Overweight rating, and adjusted its full-year 2025 revenue estimate upward by 1%. KeyBanc Capital Markets also increased its price target for Netflix to $1,070, citing resilience to macroeconomic challenges and upcoming content releases as key growth drivers. The firm revised its earnings per share estimates for 2025 and 2026 upward by 3% and 1%, respectively.
Macquarie upgraded its price target for Netflix to $1,200 while retaining an Outperform rating, following a reported 12.5% revenue increase to $10.5 billion. The firm noted a significant rise in operating margins and a 9.3% growth in the United States and Canada region. Oppenheimer also raised its price target to $1,200, highlighting Netflix’s successful pricing strategy in the U.S. and France, which did not result in increased customer turnover.
Meanwhile, Benchmark maintained a Hold rating, acknowledging Netflix’s strong execution but estimating its fair value at around $1,070. The firm noted that Netflix’s first-quarter earnings aligned with their estimates but refrained from assigning a formal price target. Netflix’s strategic moves, including a $3.5 billion stock repurchase, reflect its solid financial standing and commitment to enhancing shareholder value, as noted by Oppenheimer.
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