February’s cooler CPI print has helped markets stabilize amid ongoing tariff concerns, and one stock investors may be eyeing for a rebound is Netflix NFLX.
NFLX has fallen 14% from a 52-week high of $1,064 a share in mid-February but is still up +2% year to date which has topped the S&P 500’s -6% and the Nasdaq’s -8%. Plus, over the last two years NFLX has been one of the market’s top performers, soaring +200% to impressively outperform the broader indexes and its Zacks Broadcast Radio & Television Market’s +97%.
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Netflix & Market Sentiment
Despite economic uncertainty, investor sentiment has remained high for Netflix with many analysts raising their price targets for NFLX in correlation with the company’s market dominance as the leading streaming provider ahead of Disney (DIS), Paramount Global PARA, and Amazon’s (AMZN) Prime Video. Netflix’s original content and international expansion have been the main contributors to its continued success along with a growing ad-supported subscription plan at a reduced price to its traditional service.
During its most recent Q4 report in January, Netflix’s ad plan accounted for 55% of sign ups in countries where the service is provided, with total subscribers now over 300 million. Furthermore, Netflix added a record-breaking 19 million subscribers during Q4, which was a mind-boggling 13 million more subscribers than Wall Street expected. It’s also noteworthy that Netflix achieved over $10 billion in operating income for the first time in fiscal 2024 with GAAP net income spiking 61% to $8.71 billion.
Netflix will be reporting Q1 results on Thursday, April 17, and has exceeded the Zacks EPS Consensus in each of its last four quarterly reports with an average earnings surprise of 7.17%.
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ABR & NFLX Price Target
With 41 brokerage firms covering Netflix stock and providing data to Zacks, NFLX currently has an average brokerage recommendation (ABR) of 1.70 on a scale of 1 to 5 (Strong Buy to Strong Sell).
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Based on short-term price targets of 38 analysts, NFLX has an Average Zacks Price Target of $1,074.26, which suggests 20% upside from current levels.
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Positive EPS Revisions
Notably, earnings estimate revisions have remained higher for Netflix with the streaming giant’s EPS expected to increase 24% in fiscal 2025 to $24.58 versus $19.83 a share last year. Plus, FY26 EPS is projected to soar another 20% to $29.66.
More intriguing, over the last 60 days, FY25 and FY26 EPS estimates are up 4% and 6%, respectively.
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Monitoring Netflix’s P/E Valuation
Amplifying the positive EPS revisions is that NFLX is trading at a 36.2X forward earnings multiple, well below its five-year high of 88.5X and a slight discount to the median of 37.3X during this period.
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Conclusion & Final Thoughts
Correlating with a positive trend of earnings estimate revisions, Netflix stock sports a Zacks Rank #1 (Strong Buy). Although tariff concerns have led to recessionary fears, Netflix’s cheaper ad-service could still propel the company in the event of a potential economic downturn. This should also help sustain Netflix as the streaming king ahead of Disney, Paramount, and Amazon.
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Netflix, Inc. (NFLX) : Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).