Giuliano Benzin
Netflix’s (NASDAQ:NFLX) incredible surge, fueled in part by its performance in the fourth quarter, has compelled Wall Street to do something it rarely does: scramble to keep pace.
Eighteen Wall Street firms, including Goldman Sachs, J.P. Morgan and Barclays, raised their price targets on the streaming behemoth following the company’s strongest customer growth since the COVID-19 pandemic surge.
The median price target among the group is now at $600, a substantial 20% leap from before the quarterly results and approximately 10% below the premarket level of $541.25.
The most aggressive target among the 18 firms came from Pivotal Research, as they increased their target to $700 from $600.
Commenting on the robust results, Pivotal Research analyst Jeffrey Wlodarczak remarked in a note to clients, “Our view remains unchanged that Netflix has already won the streaming wars and this type of strong result/guidance, especially relative to its streaming peers, is what winning looks like.”
Other analysts echoed Wlodarczak’s sentiments, highlighting Netflix’s superior performance while media peers such as Walt Disney (DIS), Warner Bros. Discovery (WBD), and Paramount (PARA) (PARAA) struggle with their respective streaming businesses.
“This earnings report continued a recent theme of rebuilding investor confidence in sub-sector industry leadership and the continuation of multiple building blocks in support of platform strength,” remarked Goldman Sachs analyst Eric Sheridan.
“Introducing last year an ad-supported plan that was 30% cheaper than its core offering, Netflix materially increased its [total addressable market],” noted Evercore ISI analyst Mark Mahaney. “This is becoming clearer and clearer over the quarters and in our surveys. And not only does the ad-supported offering boost Gross Ads, it also reduces churn. And it indirectly boosts the company’s pricing power.”
“We believe NFLX is now well on its way to building a multi-billion [dollar] ads business as it very likely attains 50MM high-frequency ad-supported viewers in ’24,” added Mahaney.
During the period, Netflix added 13.12M global streaming paid memberships, marking a 12.8% increase year-over-year, bringing the year-end total to 260.28M.
Revenue catapulted by 12.5% year-over-year to $8.83B, surpassing the $8.71B consensus. Although operating income dipped to $1.5B, the full-year operating margin hit 21%—up from 18% in 2022 and ahead of the company’s 20% margin target.
Looking ahead to the first quarter, Netflix (NFLX) anticipates a 13% revenue growth, which includes a 3% impact from foreign exchange headwinds.
“Similar to prior years, we expect paid net additions to be down sequentially (reflecting typical seasonality as well as some likely pull forward from our strong Q4’23 performance) but to be up versus Q1’23 paid net adds of 1.8M,” Netflix stated.
The company also projected that first-quarter global average revenue per member would rise year-over-year on a currency-neutral basis.
On Tuesday, Netflix caused quite a stir in the media world by announcing its forthcoming addition of TKO Group’s (TKO) WWE Raw to its platform in several countries, including the U.S., starting in 2025.
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