Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Netflix shares have more upside, say Jefferies equity analysts

Published 2023-05-30, 03:26 p/m
Updated 2023-05-30, 03:26 p/m
© Reuters.

© Reuters.

Analysts at Jefferies today raised their price target on Netflix (NASDAQ:NFLX) from $405 to $440, implying a potential gain of about 16% from Friday’s closing price.

The change follows news last week that Netflix would start its U.S. effort to reshape password sharing. Analysts are positive about these changes and are also less worried about competition.

Equity analysts explained the bank's increased confidence, saying, “The new rules and pricing was right in-line with our model ($7.99 for paid sharing plan). We are now more confident in our thesis: the meaningful % of borrowers will shift into new plans following the updated pricing, and we worry less about competition (competitors are in the midst of removing content, lowering budgets, and raising prices).”

Overall, Jefferies continues to believe subscriber growth will be driven by password sharing changes.

“These changes will push non-payers into a new subscription tier vs. churning out or up-pricing. With about 100M ‘borrowers’ potentially becoming subscribers, we expect the most popular tier to vary by country. Our model is predicated on ~35% converting to subs over the next 24 months. Another benefit of the ad tier is we believe the turn-off-turn-on-ers (consumers focused on value) will become regular subscribers via the ad tier.”

While Jefferies remains positive on Netflix shares, analysts expect a lot of noise about the password sharing changes, and they are cautious on how the stock could perform during the next 30 to 45 days.

“In the past, when services raise prices, there is typically a 30-45 day temporary increase in churn. We would expect the same as subscribers and password sharers get the news of the upcoming changes. Because the June quarterly earnings falls in the window, mgmt may take a conservative view on guidance. We would be paying attention to churn rates in late July,” analysts said.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.