Netflix stock scored a price-target hike on Tuesday ahead of the company's next big test for live programming — two NFL football games on Christmas Day.
KeyBanc Capital Markets analyst Justin Patterson reiterated his overweight, or buy, rating on Netflix stock and raised his price target to 1,000 from 785.
He noted that Netflix stock has historically peaked around nine times enterprise value to next 12 months revenue, where shares are now. But he thinks things may have changed.
"While this suggests investors may have priced-in recent momentum, we see several reasons to believe NFLX can outperform the S&P 500 into 2025: 1) competitive intensity is moderating; 2) live events should drive more engagement; 3) revenue and EPS (earnings per share) growth should hold up better than peers; and 4) meaningful EPS and FCF (free cash flow) generation provides more of a valuation floor than in the past," Patterson said in a client note.
On the stock market today, Netflix stock advanced 2.3% to close at 932.12 in the shortened trading session.
Netflix stock has surged recently on the narrative that the internet television network has won the streaming video market. And live content moves and returning hit series should increase its lead as it gains both viewers and advertisers, he said.
Netflix's next live content play will be two NFL games on Wednesday: Kansas City Chiefs vs. Pittsburgh Steelers and Baltimore Ravens vs. Houston Texans. The Houston game will feature a halftime performance by music superstar Beyoncé.
Netflix is hoping to avoid the technical snafus that marred its live broadcast of the Jake Paul vs. Mike Tyson boxing match on Nov. 15. That event suffered by buffering, poor image quality and audio problems.
Netflix Stock Is On Two IBD Lists
Live programming is important to Netflix's nascent advertising business. Advertisers like live events because they draw engaged viewers.
Netflix is spending heavily to add live content. It reportedly paid $150 million to air this year's two Christmas football games, with additional NFL games set for the 2025 and 2026 holiday seasons.
Netflix also signed a $5 billion, 10-year deal for WWE programming, with the pro wrestling broadcasts starting Jan. 6.
Plus, it recently secured the U.S. streaming rights for the FIFA Women's World Cup tournaments in 2027 and 2031.
Netflix stock is on two IBD lists: IBD 50 and SwingTrader.
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