Netflix (NFLX) stock climbed 2% on Wednesday following a string of bullish calls on Wall Street as analysts doubled down on the streaming giant’s future growth trajectory.
Morgan Stanley analyst Benjamin Swinburne said he sees 30% upside based on current trading levels, writing in a new client note on Wednesday that Netflix is “both a driver and beneficiary of industry disruption.”
Swinburne, who maintained his Outperform rating on shares, said his $850 bull case assumes over 30 million subscriber net additions this year, with revenue expected to continue a double-digit growth path next year amid initiatives like Netflix’s advertising tier and its password-sharing crackdown.
“Mid-teens revenue growth in 2025 likely requires a significant scaling of its advertising business, but we believe it is putting the pieces in place to deliver on this opportunity,” the analyst said.
Netflix told advertisers earlier this month that its ad tier has reached 40 million global monthly active users — a significant jump from the 15 million users the company revealed back in November and a 35-million-user increase compared to the year-ago period.
On top of advertising momentum, the company has recently leaned on live events, like the successful Tom Brady roast, along with live sports.
Netflix won the streaming rights to two NFL games set to air Christmas Day as part of a three-season deal. Prior to the NFL agreement, the company announced a 10-year deal with TKO Group Holding’s WWE (TKO) that will bring WWE’s flagship program Raw, a live wrestling production, to the streaming service beginning in 2025.
Netflix will also host a live wrestling event between Jake Paul and Mike Tyson in July.
Shares of Netflix have climbed about 35% since the start of the year. Swinburne credited the share appreciation more to “its own strong operating execution than industry trends.”
Other Wall Street watchers agree.
Earlier this week, Evercore ISI analyst Mark Mahaney reiterated his Buy rating on shares and upped his price target by $50 to $700. The analyst cited positive survey data the firm conducted during the month of May, in addition to further upside in new and live content.
“Netflix is in the strongest position financially, fundamentally and competitively that we have ever seen,” Mahaney wrote in a new client note published on Monday. “And we see with live events and gaming two very promising long-term greenfield revenue opportunities. And of course, ‘Squid Games II’ is coming soon!”
According to Evercorse ISI’s survey work, which polled 1,300 Netflix users in the US, churn intention slowed the most in two years with just 35% of respondents saying they are “extremely likely” or “very likely” to cancel Netflix in the next three months — a 3% quarter-over quarter decline.
Additionally, Netflix’s market penetration sits at 57% compared to Amazon’s 55% and YouTube’s 47%, the survey revealed.
“It’s possible that Netflix’s $6.99 ad-supported pricing is acting as a ‘safety net’ to reduce potential churn,” Mahaney said. “Netflix once again widened its lead versus most of its streaming peers.”
