Los Gatos, California-based Netflix, Inc. (NFLX) provides entertainment services. It offers TV series, documentaries, feature films, and games across various genres and languages. With a market cap of $339.8 billion, Netflix’s operations span over 190 countries worldwide.
The entertainment giant has significantly outperformed the broader market over the past year. NFLX stock prices have surged 63.3% on a YTD basis and 82.1% over the past 52-week period, outpacing the S&P 500 Index’s ($SPX) 25.7% gains on a YTD basis and 36.8% returns over the past year.
Zooming in further, NFLX has also outperformed the Invesco Next Gen Media and Gaming ETF’s (GGME) 31.8% return on a YTD basis and 45% gain over the past year.
Netflix stock prices surged 11.1% following its impressive Q3 earnings release on Oct. 17. The streaming giant reported a robust 15% year-over-year growth in total revenues, reaching $9.8 billion, driven by substantial growth in paid subscribers across various regions. The Asia-Pacific region led with an 18.9% rise in streaming revenue, reaching $1.1 billion, supported by 24% growth in paid memberships to 52.6 million. The U.S. & Canada and EMEA regions also showed solid revenue growth of 15.7% and 16.3%, respectively, while Latin America lagged slightly, with an 8.6% increase to $1.2 billion, impacted by a decrease of 68,000 paid memberships during the quarter.
In addition to the robust revenue growth, Netflix also reported a significant growth in profitability. Its net income soared by 40.9% year-over-year to $2.4 billion, and its EPS of $5.40 surpassed analysts’ consensus estimates by 6.1%, bolstering investor confidence.
For the current fiscal year, ending in December, analysts expect NFLX to report a 64.4% year-over-year growth in EPS to $19.78. Netflix’s earnings surprise history is mixed. It has surpassed analysts’ bottom-line estimates in three of the past four quarters while missing on another occasion.
NFLX stock has a consensus “Moderate Buy” rating overall. Out of the 41 analysts covering the stock, 23 recommend “Strong Buy,” two advise “Moderate Buy,” 14 suggest “Hold,” and two advocate a “Strong Sell” rating.
On Oct. 29, Guggenheim analyst Michael Morris maintained a “Buy” rating on NFLX while raising the price target to $825.
As of writing, NFLX is trading above its mean price target of $774.58. The Street-high target of $925 suggests a potential upside of 16.3% from current price levels.
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