Consumer Discretionary

Netflix (NFLX) provided “encouraging” 2025 revenue guidance and reported “strong” net subscriber additions in the third quarter, Wedbush Securities said in a note Friday. “The primary driver of this surge will be a more robust content slate than we have seen in 2024,” Wedbush said in a Friday note following Netflix’s Q3 results released Thursday. The firm said the company’s gain of 5.1 million net paid subscribers in the quarter exceeded the consensus of 4 million. Wedbush said Netflix’s results for the quarter were “solid,” with revenue topping consensus, guidance and the firm’s estimate. Wedbush boosted its price target on Netflix to $800 from $775 and maintained its outperform rating. Netflix shares advanced more than 10% in recent Friday trading.

Netflix’s ad-supported tier is growing at a healthy clip, leaving management to expect ad revenue to double in 2025 while still not a primary driver of overall growth, say analysts at UBS in a research note. The streaming giant saw a higher percentage of sign-ups opting for its ad tier in 3Q than in 2Q, say the analysts, and management expects to reach a critical scale across ad markets next year. Other takeaways the analysts note from Netflix executives include their suggestion that revenue growth in 2025 will be driven more by members than average revenue per member driven. “We believe the company could lean into monetization efforts with price/hour of consumption at the low end of peers and the content pipeline gaining steam,” say the analysts. Shares rise 11%, making it the best performer in the S&P 500 and Nasdaq 100.

Netflix stock was downgraded by one analyst and upgraded by another on Monday, 10 days before the streaming company reports third-quarter earnings. Netflix stock has gained 48% this year, and that increase has helped push its valuation higher. Shares are now trading at 32.6 times the earnings expected over the next 12 months, which is higher than the S&P 500’s 21.7 times. Barclays analyst Kannan Venkateshwar wrote in a research note on Monday that the stock’s valuation is based on the assumption that Netflix’s revenue growth will remain in the low double digits for the foreseeable future. “Even if the company gets to its revenue growth goal, valuation is implicitly pricing in more than a doubling of sub [subscriber] base from present levels,” Venkateshwar wrote. He downgraded shares to Underweight from Equal Weight while maintaining a target of $550 for the price. Netflix introduced major changes to its business model