Netflix Inc (NASDAQ:NFLX) shares traded lower Thursday, even as analysts raise their price targets ahead of the streaming giant’s second-quarter earnings report next week. Investors are looking to see if the company can build on its strong first-quarter performance and justify the recent stock rally.
What To Know: KeyBanc Capital Markets boosted its price target on Netflix to $1,390 from $1,070, citing confidence in long-term growth driven by live events, price increases, and an expanding advertising business. The firm anticipates revenue will continue to grow by double-digit percentages over the medium term.
Netflix is scheduled to report its second-quarter earnings on Thursday, July 17. Analysts expect an EPS of $7.06 on $11.04 billion in revenue.
KeyBanc is even more bullish, forecasting second-quarter revenue of $11.2 billion and EPS of $7.20, slightly above consensus, attributing the potential upside to favorable foreign exchange rates. For the third quarter, KeyBanc expects revenue guidance to align with the Street’s $11.3 billion estimate.
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What Else: KeyBanc also highlights that Netflix’s focus on one-time live events, such as the upcoming Taylor vs. Serrano fight, is a strategic move to add value without committing to more expensive long-term sports rights.
The firm also suggests that long-term investors remain optimistic due to the belief that Netflix is still under-monetized compared to traditional media, and that its technological expertise will enable it to leverage innovations in AdTech and AI more quickly than legacy competitors.
This technological edge, combined with a consistent track record of producing surprise content hits, is expected to support future monetization and engagement.
Looking ahead, analysts will likely be closely watching the performance of new live events and the impact of a weaker U.S. dollar on international revenue.
While the final season of “Squid Game” was recently released, viewership is expected to be weighted toward the second half of the year, alongside the highly anticipated new seasons of “Wednesday” and “Stranger Things.”
Analyst Ratings: Recent analyst ratings have been mixed ahead of the earnings report. On July 10, Barclays also increased its price target, though more modestly, to $1100 from $1000, while maintaining an Equal-Weight rating. In a more cautious move, Seaport Global downgraded Netflix on July 7, changing its rating from Buy to Neutral.
Other analysts have also weighed in recently. On July 2, Canaccord Genuity maintained its Buy rating and increased its price target from $1380 to $1525. On the same day, Goldman Sachs also raised its price target, but only to $1140 from $1000, while reiterating a Neutral rating.
Looking back to late June, Pivotal Research showcased strong optimism by maintaining its Buy rating and lifting its target to $1600 from $1350 on June 20.
Price Action: According to data from Benzinga Pro, NFLX shares closed Thursday’s session lower by 2.93% to $1,250.59. The stock has a 52-week high of $1,341.15 and a 52-week low of $588.43.
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How To Buy NFLX Stock
Besides going to a brokerage platform to purchase a share – or fractional share – of stock, you can also gain access to shares either by buying an exchange traded fund (ETF) that holds the stock itself, or by allocating yourself to a strategy in your 401(k) that would seek to acquire shares in a mutual fund or other instrument.
For example, in Netflix’s case, it is in the Communication Services sector. An ETF will likely hold shares in many liquid and large companies that help track that sector, allowing an investor to gain exposure to the trends within that segment.
NFLX Price Action: Netflix shares were down 2.90% at $1250.90 on Thursday, according to Benzinga Pro.
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