"With NFLX at $87.56, the implied upside of 273.55% is steep, and we rate the name a buy. Confidence in the call is 90%, reflecting strong analyst consensus, accelerating earnings, and a forward EPS profile the market appears to be mispricing after a sharp post-earnings drawdown."
"The slide accelerated after the April 16 Q1 2026 report, when revenue of $12.25 billion rose 16.2% YoY and edged consensus, while EPS of $1.23 missed the $1.34 estimate even with a $2.80 billion Warner Bros. termination fee flowing through other income. Free cash flow guidance was raised to approximately $12.5 billion for 2026, and ad-tier sign-ups exceeded 60% of all sign-ups in ads markets."
"Management reaffirmed 12% to 14% revenue growth and a 31.5% operating margin for 2026, with the ad business expected to roughly double to approximately $3 billion. Advertiser count climbed over 70% year over year to more than 4,000 clients, and APAC posted 20% YoY revenue growth behind the World Baseball Classic, which co-CEO Ted Sarandos called "the most-watched program we have ever had in Japan"."
"Sell-side support is firm with 37 buy or strong buy ratings versus a single strong sell. If margin expansion sticks and the ad ramp compounds, our bull case extends to $342.32 on a 12-month view. JPMorgan reiterates an Overweight rating on Netflix with a $118 price target following the company's fourth annual advertising upfront."
Netflix shares trade far below their 52-week high after a sharp April decline. The April 16 Q1 2026 results showed revenue growth of 16.2% year over year and free cash flow guidance raised to about $12.5 billion for 2026, but EPS of $1.23 missed the $1.34 estimate. Advertising momentum improved, with ad-tier sign-ups exceeding 60% of sign-ups and advertiser count rising to more than 4,000 clients. Management reaffirmed 12% to 14% revenue growth and a 31.5% operating margin for 2026, with the ad business expected to roughly double to about $3 billion. APAC revenue grew 20% year over year, supported by major programming. Analyst ratings skew strongly positive, with a bull case extending to $342.32 if margins and ad ramp continue.
Read at 24/7 Wall St.
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