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Shares of Netflix (NASDAQ:NFLX) are up over 1% in pre-open Monday trading after an Oppenheimer analyst upgraded to Outperform with a $325 per share price target.
The upgrade move comes after Oppenheimer analysts performed a deep dive into the company’s ad opportunity, coupled with the proprietary consumer survey results.
“While ad-tier will attract some first-timers, there’s a larger opportunity to re-engage churned subscribers. Among 15% of US churned subs, 43% would re-subscribe at a lower price. Of the 9% who’ve never subscribed, 30% would do so at a lower price. Approximately 70% of current Basic subs would downgrade to ad-tier vs. 55% Standard and 46% Premium,” the analyst said in a client note.
The company is seen as being in a “unique position aggregate large audiences and control the timing of series launches for top-tier advertisers, commanding high CPMs.”
The analyst believes the Street estimates are conservative and don’t reflect the full ad opportunity.
“The Street is not yet factoring in the advertising opportunity, and we believe sentiment should improve as more analysts update models. We’re forecasting subscriber net additions of 15M/21M/19M vs. Street forecasts of 11M/13M/19M in ’23E/’24E/’25E, respectively,” the analyst concluded.
