Morgan Stanley and Bank of America are optimistic about Netflix’s future, recommending a buy or overweight, Goldman Sachs takes a more conservative stance: the reasons.
BofA notes that continued growth in ad-supported subscriptions, significant contribution from India and the benefits of password sharing have been key drivers of this performance.
On July 18, Netflixthe global leader in streaming services, announced its financial results for the second quarter of 2024. Although the company’s shares fell the following day, several investment banks maintain an optimistic outlook for the company.
Despite this, some analysts suggest that now is not the best time to buy Netflix shares. Netflix shares have risen 48% over the past year, ending last week at $633.34. Here’s how top investment banks view the stock. Wall Street the current situation of the company:
Morgan Stanley’s take on Netflix stock
Morgan Stanley issued a favorable report on Netflix, noting that its second-quarter results beat expectations. The bank’s analysts say these results strengthen their confidence in Netflix’s ability to achieve revenue growth. double-digit growth, excluding currency effects, and a compound annual growth rate of approximately 25% in adjusted earnings per share from 2024 to 2027.
Based on this analysis, Morgan Stanley has set a target price of $780 for Netflix shares, with an optimistic scenario that could take the price up to $950. Consequently, the bank maintains its “overweight” rating on the company’s shares, according to Bloomberg.
Goldman Sachs: Neutrality on the risk/reward balance
Goldman Sachs analysts have acknowledged that Netflix has delivered a solid balance sheet, driven by better-than-expected subscriber growth, supported by robust content programming and expansion of its ad-supported service tier. Nevertheless, the bank has maintained its “Neutral” rating on Netflix shares and slightly adjusted its target price to $659, from $650. Goldman Sachs says that at current levels, they believe risk and reward are balanced.
Bank of America: Buy recommendation
Bank of America (BofA) praised Netflix’s second-quarter results, highlighting the addition of 8.1 million net subscriptions, which exceeded both the company’s guidance and the bank’s estimates.
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BofA notes that continued growth in ad-supported subscriptions, significant contribution from India and benefits from password sharing have been key drivers for this performance. Based on these factors, BofA believes that Netflix remains one of the best-positioned companies in the media sector and that it has several growth drivers, including the rapid development of its advertising business. Therefore, the bank has assigned a “Buy” rating to Netflix shares and a target price of $740.
While Morgan Stanley and Bank of America are optimistic about Netflix’s future, recommending a buy or overweight rating, Goldman Sachs takes a more conservative stance, maintaining a neutral rating due to the balance between risks and opportunities at current price levels.
Source: Ambito
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