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Now may be the time for investors to step to the sidelines on Netflix , according to Loop Capital. The firm downgraded its investment rating on the dominant streaming platform to hold from buy on Monday, but it also raised its 12-month price target by $150 to $950 to catch up with where the stock is trading, implying a little more than 3% upside from Friday’s close. Alan Gould, a Loop managing director, said his main concern has to do with Netflix’s “historically high” valuation, noting that it has an enterprise value of 9.4 times forward revenue estimates. That’s close to the highs seen in mid-2021 and was only topped by a high in mid-2018, he said. “We upgraded NFLX almost 16 months ago on the thesis [that] the competitors raising price and reducing spend further [are] boosting NFLX’s competitive position, NFLX having the largest pipeline of unreleased content and global production going into the strikes, successfully implementing paid sharing, and optimistic on advertising,” Gould said in a note to clients on Sunday. “We believe those issues are largely factored into the stock and the shares are now approaching fair value.” All this comes as Netflix has forecast 11% to 13% revenue growth for 2025. Through the end of the decade, Gould is expecting the company to see compounded revenue growth of 12.6%. “In our view, it is not prudent to project much higher revenue growth assumptions even assuming moves into more genres, such as more live sports, and a successful advertising rollout,” Gould wrote. While Gould’s call makes him one of 12 analysts with hold ratings Netflix, according to LSEG data, Wall Street is overwhelmingly bullish. Of 48 analysts covering the stock, 32 rate it a strong buy or buy. Still, the average 12-month price target of $810 implies nearly 12% downside from Friday’s close. NFLX YTD mountain NFLX, year-to-date Oppenheimer – which has an outperform rating on Netflix – also increased its price target Monday, seeing about 16% potential upside ahead. Shares of Netlfix were marginally higher in early trading Monday. The stock has more than doubled the performance of the S & P 500 this year, rising more than 89% year to date vs 27.4% for the broader market.
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