Netflix stock rallied after Bank of America analysts restored the video streaming giant’s stock as a “buy” and raised its price target to $370.
BofA analyst Jessica Relf Erlich cited Netflix’s launch of an ad-supported streaming tier, restrictions on password sharing, and a return to “stable” subscriber growth as a basis for recommendations. share. “We believe this pivot offers a number of benefits such as better use of existing scale and first-party data (advantages coveted by advertisers), the ability to monetize interaction of password-sharing viewers and expansion of the long-term TAM (total addressable market) of subscribers (especially international),” Relf Erlich wrote in a note to analysts. invest on November 15.
Shares of Netflix rose $11.85, or 4%, to $311.12 in mid-morning trading Tuesday. That’s down from a 52-week high of $700 for streamers. But a new-look Netflix that has stabilized subscriber growth as it ramps up ad-supported streaming has picked up a string of bullish targets from other upbeat analysts after Q3 earnings. its.
That includes Evercore ISI’s Mark Mahaney and Cowen analyst John Blackledge raising their share price target to $340, Wedbush Securities analyst Michael Pachter Guggenheim raising his share price target to $325. la. Meanwhile, Wells Fargo’s Steven Cahall is sticking to his $300 price target.
Making her bullish case that her price target exceeds those of Wall Street peers, BofA’s Relf Erlich argues that Netflix remains a streaming juggernaut, with global scale and strong brand. That’s despite the increasingly saturated global streaming market, which prompted Netflix to report its first quarterly subscription loss earlier this year as growth stalled in North America.
Netflix grew back in customers in the third quarter of fiscal 2022, adding 2.4 million subscribers out of a total of 223 million global customers. “Despite slower sub-growth, we believe efforts to improve monetization through value-driven ad tiers and significant conversion of password sharers are likely to drive operational/financial growth,” wrote Relf Erlich in an investor note.
She estimates adding an AVOD tier could bring in $719 million in new North American revenue for Netflix by 2024, and reducing password sharing could bring in $863 million in new revenue in the US and Canadian markets. .