A Wall Street analyst has downgraded Netflix stock on valuation, saying the subscription streaming video leader needs time to prove its next growth strategy.
Seaport Research Partners analyst David Joyce on Sunday lowered his rating on Netflix stock to neutral from buy. He also removed his price target, which had been 1,230.
On the stock market today, Netflix stock dropped 0.6% to close at 1,289.62. On June 30, Netflix stock notched a record high of 1,341.15.
Joyce said he sees less than 10% upside for Netflix stock over the next 12 months.
"Plenty of the long-term opportunity set is factored into the shares at this price, and the company needs time to execute against the expectations in advertising, aggregating (content), launching experiences, and expanding share again," Joyce said in a client note.
Netflix lately has been ramping its ad-supported service offering and cutting innovative content deals.
For instance, in June, Netflix signed a distribution agreement with France's largest commercial television company, TF1 Group. Netflix will stream TF1 channels and on-demand content on its platform to subscribers in France starting in summer 2026.
Also, Netflix plans to open in-person attractions soon that feature its popular shows and movies. The Netflix House facilities will open in Philadelphia and Dallas at the end of 2025 and in Las Vegas in 2027, the company said.
Joyce said he expects Netflix stock to be volatile around its second-quarter earnings report, due July 17.
Netflix is on three IBD lists: Leaderboard, IBD 50 and Big Cap 20.
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