Proactive Investors - Investors holding Netflix Inc (NASDAQ:NFLX) shares will benefit from a “reacceleration” of revenue growth through the next twelve months, that’s according to analysts at Deutsche Bank (ETR:DBKGn).
The team at Deutsche, which rates Netflix as a ‘buy’, reacted to last night’s results statement by nudging higher their price target to US$410 per share, from US$400, suggesting some 22% upside to Tuesday’s close.
Meanwhile, the broader market was less upbeat about the streamer with the stock indicated more than 1% in Wednesday’s pre-market exchanges.
Netflix last night reported earnings per share of $2.88, above the consensus analyst expectation of US$2.86. Revenue came in at US$8.16bn, slightly below to expectations of US$8.17bn.
At the same time, the statement revealed that Netflix had failed to attract as many new subscribers as expected during the first quarter – adding 1.75mln new paying users in the three-month period, versus expectations of around 2.3mln additions.
Deutsche noted that it has lowered its revenue and earnings for 2023, accounting for the postponement of the broader account sharing initiative from late in the first quarter to sometime in the second.
But, also, the German bank ups its forecasts for the full year as a result of management guidance that it intends to reduce spending on content, which is expected to boost free cash flow by around US$500mln.
“We are positive on the outlook for Netflix's stock price over the next 12 months as account sharing drives a reacceleration in revenue growth in 2H23 and 2024; followed by the addition of growth from advertising in 2024+, which we believe represents a large, long-term opportunity for Netflix,” Deutsche analyst Bryan Kraft said in a note.
“We also believe that advertising supported tiers give Netflix greater flexibility to raise pricing on ad-free tiers over time.”
In New York, ahead of Wednesday’s open, Netflix shares were seen US$4.01 or 1.25% lower at US$329.54.