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UBS lifts price target on Netflix, sees sustainable double-digit growth ahead

Published 02/27/2024, 09:34 AM
Updated 02/27/2024, 09:37 AM
© Reuters.  UBS lifts price target on Netflix (NFLX), sees sustainable double-digit growth ahead

UBS analysts raised estimates and the price target on Netflix (NASDAQ:NFLX) “to reflect continued momentum in subscriber trends, upside to ARM (avg. revenue per membership) and higher operating leverage.”

The price objective was hiked from $570 to $685, implying over 16.5% upside from current Monday’s closing price.

Although the broker anticipates a slowdown in Netflix’s new subscriber additions, it believes the company “ still has significant runway as it continues to convert users to paid subs and attracts new cohorts.”

“This, along with price increases and a ramp in the advertising platform should drive accelerating revenue growth in '24 (UBSe 15%+ vs. +7% in '23), or 13% CAGR through '27,” analysts added.

With traditional TV facing growing headwinds, broadcasters are rapidly adopting new strategies to achieve profitability in streaming, UBS analysts explained.

These strategies encompass raising prices, merging platforms, refining their content libraries, reducing content budgets, and placing a “renewed focus” on licensing their content.

“As the objective in streaming shifts from subscriber growth to profitability for the traditional media companies, we see Netflix as the ultimate beneficiary of this industry rationalization,” the analysts wrote.

NFLX shares opened 1.3% higher on Tuesday.

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