Netflix Will Be Difficult to Catch, Says Analyst

Netflix (NASDAQ: NFLX) shares are down more than 50% in 2022, falling 2.5% in Wednesday's session, but the stock has edged higher early Thursday after CFRA upgraded the stock.

CFRA analyst Kenneth Leon double-upgraded Netflix shares to Buy from Sell, raising the firm's price target on the stock to $310 from $225.

Leon told investors in a research note that he believes it “will be difficult for competitors to catch” Netflix, which is one of the few profitable streaming providers on a global scale.

The analyst added that new original content should help sustain Netflix's subscriber trends, with new original content such as “Emily in Paris,” “Glass Onion,” and “Blood Origin” helping to benefit subscriptions and reduce churn.

In addition, he feels the Netflix advertising-supported tier and new paid sharing steps to better control account sharing should provide near-term catalysts for the company.

In contrast, a few days before Christmas, Needham analyst Laura Martin maintained a Hold rating on Netflix and lowered the firm's FY23 EPS view to $9.31 from $11.57, also cutting the revenue view to $33.4 billion from $35.8 billion.

Martin told investors in a research note that Netflix's peak subscriptions may be behind it because churn is rising for all Over-the-Top (OTT) providers. She added that with 57% of ad-tier subscription adds coming from higher-priced Netflix tiers in the fourth quarter, Netflix's business comes under downward ARPU pressure.