Netflix shares could climb another 35%: Oppenheimer

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on Sep 19, 2022
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  • Oppenheimer upgrades Netflix to "outperform" with upside to $325.
  • Analyst Jason Helfstein explained the bullish view in a note to clients.
  • Netflix shares are currently down about 60% versus the start of 2022.

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Now is a good time to hop back into the Netflix Inc (NASDAQ: NFLX) stock, says Jason Helfstein. He’s a Managing Director at Oppenheimer.

Netflix shares should be worth $325

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Helfstein, on Monday, recommended buying Netflix shares, which, he said, should be worth $325. His price objective translates to about a 35% upside from here.

The bullish view is primarily related to the ad-supported tier that Netflix is expected to launch in November. Helfstein expects “that” to help with lowering churn, increasing the number of subscribers, and boosting the average revenue per user.

Street is not factoring in the ad opportunity. Sentiment should improve as analysts update models. We’re forecasting subscriber net additions of 15M/21M/19M vs Street forecasts of 11M/13M/19M in `23/`24/`25E, respectively.

Netflix shares are currently down roughly 60% for the year.

Netflix can command high CPMs

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According to Helfstein, the media company will see $4.6 billion worth of ad revenue in 2025.

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He expects 282 million subscribers and $42.4 billion in total revenue by then (ahead of Street estimates). In a note to clients, the analyst added:

Netflix is in a unique position to aggregate large audiences and control the timing of series launches for top-tier advertisers, commanding high cost per thousand views.

It’s an interesting “outperform” considering the Federal Reserve, so far, has not signalled intent to go easy on rates anytime soon. If it continues to tighten, that will most probably push the economy into a meaningful recession, which tends to be a headwind for the ad-focused businesses.

At the time of writing, Netflix shares are trading at a price-to-earnings multiple of 21.

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