Netflix Price Target Cut, Morgan Stanley Remain Bullish on NFLX Into 2026

Netflix stock (NFLX) is currently trading at $94.90 in the pre-market, a marginal increase of $0.11  (0.12%) from the previous close, as Morgan Stanley release a mixed note on NFLX. Despite the price target cut, the firm remains optimistic about Netflix's long-term prospects, maintaining an Overweight rating on the stock.

The media and entertainment landscape is seen as becoming increasingly competitive, with Netflix actively involved in a high-stakes bidding war for Warner Bros. Discovery (WBD). Netflix's proposed $72 billion cash-and-stock deal to acquire WBD's film and TV studios, including HBO Max, aims to significantly expand its content library.

However, Paramount Skydance has presented a competing $77.9 billion all-cash bid, intensifying the acquisition battle and injecting uncertainty into Netflix's strategic plans. Regulatory hurdles are anticipated for both proposals due to concerns about market consolidation.

Morgan Stanley's revised price target for Netflix, lowered from $150 to $120, reflects a recalibration of expectations amid these challenges, but also a continued confidence in the company's potential. The firm emphasizes the importance of companies within the media and entertainment sector that are resilient to AI disruption, benefit from the growing demand for premium content experiences, and demonstrate a unique earnings trajectory.

Netflix's Q3 earnings miss contributed to a decline in its stock value, raising concerns about its short-term financial performance. The stock hit its lowest level since April following the earnings release. However, analysts like Morgan Stanley's Benjamin Swinburne project substantial long-term earnings growth for Netflix, estimating a range of 25-30%.

This projection underscores the belief in Netflix's ability to navigate current headwinds and capitalize on future opportunities in the evolving streaming market. While the potential acquisition of Warner Bros. Discovery could significantly enhance Netflix's content offerings and market position, the competitive bidding process and regulatory scrutiny add layers of risk and uncertainty.