Netflix wins ‘double upgrade’ from a Bank of America analyst

on Nov 15, 2022
  • Jessica Reif Ehrlich sees upside to $370 in Netflix shares.
  • She's bullish on the recently launched ad-supported tier.
  • Netflix is still down nearly 50% versus the start of 2022.

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Shares of Netflix Inc (NASDAQ: NFLX) have nearly doubled already from their year-to-date low but a Bank of America analyst says there’s more where that came from.

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Netflix shares have upside to $370

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The streaming giant, on Tuesday, won a double upgrade from Jessica Reif Ehrlich who now recommends buying Netflix shares and sees upside in them to $370 – up another 20% from here.

Her bullish view is chiefly predicated on the recently launched ad-supported tier and the company’s commitment to cracking down on password sharing.

Despite slower sub growth, we believe efforts to improve monetisation via a value-oriented ad tier and significant conversion of password sharers has the potential to drive operating [and] financial gains.

Netflix will have more than 250 million subscribers by 2024 as it still has a significant room to grow outside of the United States, the analyst added. For the year, Netflix shares are still down close to 50%.

Netflix stock is a favourable risk-reward

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Ehrlich is particularly impressed that Netflix continues to lead the switch to non-liner media despite increased competition. Its entry in the advertising-based video-on-demand, she added, will be accretive because of:

Company’s ability to drive engagement; extraordinary advertiser demand on its ability to reach younger demos and offer exposure to cordcutters and cord-nevers; likelihood of receiving premium CPMs; and potential to drive incremental subs growth.

The Bank of America analyst forecasts a compound annual growth rate of 9.0% and 10% respectively for its revenue and EBITDA from 2021 to 2024.   

At about 28 times, Ehrlich sees the risk-reward in Netflix shares as favourable.


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