- Netflix (NFLX) shares rose over 4% to $906.55 as Morgan Stanley (MS) named it the top Media & Entertainment pick, citing resilience and projecting ad revenue growth from $700 million in 2024 to $1.3 billion in 2025, despite its minor role in overall revenue.
- Analysts expect 20–25% annual EPS growth through 2028, driven by strong engagement – nearly two hours daily per user and 94 billion hours streamed in late 2024 – bolstered by hits like Adolescence and a robust 2025 content pipeline.
- Morgan Stanley sees Netflix leading the $40 billion-plus streaming market with a $1,150 target, a bull case of $1,500 on subscriber gains, or a bear case of $550 amid economic or regulatory risks.
Netflix (NFLX) shares surged over 4% to $906.55 in Tuesday’s early trading, reflecting Morgan Stanley’s (MS) newfound optimism as the Wall Street firm named the streaming giant its top pick in the Media & Entertainment sector, overtaking Walt Disney (DIS). The bank’s analysts, Benjamin Swinburne and Thomas Yeh, reiterated an ‘Overweight’ rating with a $1,150 price target, citing Netflix’s resilience in a shaky global economy, bolstered by a weaker U.S. dollar and a subscription business poised to weather a softening ad market. They project advertising revenue to nearly double from $700 million in 2024 to $1.3 billion in 2025, though it remains a modest driver at 10–15% of revenue growth and under 5% of total revenue, with growth hinging on ad-supported user expansion rather than per-member ad revenue increases.
Morgan Stanley’s bullish stance is underpinned by Netflix’s commanding engagement, with users averaging nearly two hours daily and over 94 billion hours streamed in the second half of 2024, driven largely by original programming like the standout series Adolescence, poised to rank among the platform’s all-time top English-language shows. The firm forecasts 20–25% annual adjusted EPS growth over the next four years, fueled by double-digit revenue increases and margin gains, positioning Netflix alongside YouTube as a $40 billion-plus titan in a consolidating global streaming landscape. With a robust 2025 content slate – including new seasons of Stranger Things, Wednesday, and Squid Game – and a vertically integrated model rich in proprietary IP, analysts see a bull case lifting shares to $1,500, though a bear scenario tied to macro weakness or regulation could drag them to $550.
WallStreetPit does not provide investment advice. All rights reserved.
Leave a Reply