'Temporary weakness': analysts advised to buy Netflix stock on the downturn
Wall Street considers Netflix's advertising business in particular to be undervalued
Wall Street analysts are revising their target price on Netflix's stock, but are largely maintaining buy recommendations / Photo: Walter Cicchetti / Shutterstock.com
Analysts on Wall Street mostly remained positive about Netflix shares after its report, although the stock fell by 2% during the day. Many lowered the target price of securities, but maintained the recommendation to buy them. In particular, Wedbush predicted the company at least twofold growth in advertising revenue in 2026: improved results should provide a significant rise in the stock, he believes. However, the streaming service did not escape at least one downgrade.
What the analysts are saying
- Wedbush, which lowered its target on Netflix shares a week before the report from $140 to $115, explained the fall of the securities in trading on January 21 by the fact that "the report was less impressive" than investors are used to. However, the bank believes that the growth of Netflix's advertising business is undervalued and will be a key driver, so they advise buying the stock. "Advertising revenue should at least double to $3 billion in 2026. Especially if Netflix closes its acquisition of Warner Bros. next year," Wedbush said in a note cited by Seeking Alpha. - Results should improve throughout the year, and the stock will get a boost in the second half of the year when ad revenue and price growth outpace content cost growth."
- Morgan Stanley lowered the target for the securities of the streaming service after the publication of the reports by $10 - to $110. This is higher than the closing price of trading on Wednesday by 29%. The bank believes that Netflix is able to increase adjusted earnings per share by more than 20% per year until 2028. In addition, Morgan Stanley highlighted the company's strong results for 2025, including an increase of 25 million subscribers, and predicted Netflix will see double-digit revenue growth and margin expansion in 2026.
- Needham cut its target price on Netflix shares by $30 to $120, but it nonetheless advises buying them. The bank believes the fourth-quarter report was strong and the content portfolio for 2026 is impressive. Needham expects Netflix to expand this year in international markets. Analysts note that Netflix is actively diversifying into segments such as interactive voting, podcasts, video games, etc.
- Jefferies, which cut its target price on the stock from $150 to $134 in December, saw the report as mixed, but that didn't dent its confidence that Netflix will remain a dominant player in streaming. The bank advises buying the company's stock and forecasts revenue and free cash flow growth of 10-15% per year over the next five years. Jefferies also notes that Netflix has reaffirmed internal targets for 2030: $80 billion in revenue, $30 billion in operating income and 410 million subscribers.
- Analyst firm Fubon downgraded Netflix's stock from a "buy" rating to neutral after the reports were released. It also adjusted the target price from $143 to $98, which is still up 14% from the current price. Fubon cited potential margin pressure from increased investment in content and the merger with Warner Bros. as the reason for the downgrade.
In total, according to MarketWatch, shares of the streaming service are tracked by 48 analysts, with 32 of them advising to buy the securities, 13 to hold them in their portfolios and three to sell them. The Wall Street consensus price target is $120.6, implying a 41% upside.
This article was AI-translated and verified by a human editor
