A Wall Street analyst who had been neutral on Netflix stock has turned positive on the streaming video leader, citing its runway for growth and improved profitability.
MoffettNathanson analyst Robert Fishman on Monday upgraded Netflix stock to buy and increased his price target to 1,100 from 850.
On the stock market today, Netflix stock advanced 3.5% to close at 950.02. With the move higher, Netflix stock rose above its 50-day moving average line, a positive technical indicator.
"Despite all of Netflix's recent success in reinvigorating growth, we believe its engagement will allow the company to better monetize and unlock greater profits in the years ahead," Fishman said in a client note.
Netflix's advertising-supported service tier will be a revenue driver for the company, he said.
"We now forecast Netflix will generate over $6 billion in advertising revenue in 2027 and almost $10 billion by 2030," Fishman said.
Netflix's ad tier also allows the internet television network to attract more subscribers with a lower-priced offering, he said. Netflix ended 2024 with 301.6 million subscribers worldwide.
Meanwhile, profit margins should improve in the years ahead, Fishman said.
"Continued growth in subscription revenues and faster growth in advertising should drive margin expansion of at least +200 (basis points) per year going forward, reaching 40% by 2030 with room to grow from there," he said.
Netflix Stock News: Sports Streaming Deals
In other news, Netflix reportedly is in discussions with the UFC to gain streaming rights to the mixed martial arts competition, according to the New York Post. The Ultimate Fighting Championship currently has a streaming deal with Walt Disney's ESPN.
Last month, Netflix's chief content officer, Bela Bajaria, told Puck News that the streamer plans to bid for Sunday afternoon NFL games when those rights become available.
Netflix stock is on IBD's Big Cap 20 stock list.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
