Netflix Shares Poised to Outperform S&P 500 Into 2025, Says KeyBanc Analyst
Netflix’s shares saw a price target increase on Tuesday before two NFL football games on Christmas Day, the company’s next major test for live programming. Justin Patterson, an analyst at KeyBanc Capital Markets, increased his price objective for Netflix shares from 785 to 1,000 and reaffirmed his overweight, or buy, rating. According to him, Netflix’s stock has historically peaked at a rate that is about nine times its enterprise value to its revenue for the next 12 months. However, he believes that things might have altered.
While this suggests investors may have priced-in recent momentum, we see several reasons to believe NFLX can outperform the S&P 500 into 2025: 1) competitive intensity is moderating; 2) live events should drive more engagement; 3) revenue and EPS (earnings per share) growth should hold up better than peers; and 4) meaningful EPS and FCF (free cash flow) generation provides more of a valuation floor than in the past,
Patterson
Netflix Invests $150M in Christmas NFL Games, Boosting Stock and Advertiser Interest
Recent reports that the internet television network has conquered the streaming video industry have caused Netflix’s stock to soar. Additionally, he stated that live content initiatives and resurgent popular programs should boost its lead as it attracts more viewers and sponsors. On Wednesday, Netflix will broadcast two NFL games: the Baltimore Ravens vs. Houston Texans and the Kansas City Chiefs vs. Pittsburgh Steelers. Music icon Beyoncé will perform at halftime during the Houston game.
A key component of Netflix‘s fledgling advertising business is live programming. Live events attract interested viewers, which is why advertisers prefer them. On the other hand, Netflix is investing a lot of money in live content. According to reports, it spent $150 million to broadcast the two Christmas football games this year. Other NFL games are scheduled for the holidays of 2025 and 2026.
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