Netflix has even more upside than investors previously anticipated, according to JPMorgan. Analyst Doug Anmuth hiked his price target on the streaming giant by more than 20% to $470 from $380 and reiterated his overweight rating. The new target suggests upside of 17% from Tuesday’s close. This comes after Netflix said at its Upfront presentation last month that the company’s ad-supported tier and password sharing crackdown are gaining traction. “We’re updating our NFLX model to capture the broader Paid Sharing opportunity following the rollout in late May to 100+ markets,” Anmuth said to clients in a Wednesday note. NFLX 1D mountain Netflix shares 1-day That model suggests Netflix could monetize more of its 100 million borrowers, with the analyst expecting 14 million by the end of this year, 26 million by the end of 2024 and 33 million by the end of 2025. For Netflix, the business strategy will translate into greater revenue, Anmuth said. The analyst forecasts total paid sharing revenue of $2.4 billion in 2024 and $3.5 billion in 2025. “With some Paid Sharing benefits already built into our model, our revenue increases 4% in 2024 & 6% in 2025, while our operating income increases 6% in 2024 & 9% in 2025. We now model GAAP EPS of $15.40 in 2024 & $18.89 in 2025, along [with free cash flow] of $6.0B in 2024 & $8.6B in 2025,” Anmuth wrote. Netflix shares are trending higher this quarter, up more than 15%, while the S & P 500 climbed 4%. They’re higher by 35% in 2023. “We recognize NFLX shares are up 17% since the Upfronts (vs. 3% for the SPX), but we believe there is further upside as NFLX executes on paid sharing & estimates move higher,” Anmuth added. Shares rose 2% in the premarket. JPMorgan was not the only Wall Street firm to hike its price target on Netflix. On Wednesday, Wells Fargo’s Steven Cahall raised his price target to $500 from $400, implying 25% upside. —CNBC’s Michael Bloom contributed to this report.
