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Netflix’s (NASDAQ:NFLX) catalyst path for 2023 is positive, Wells Fargo analysts wrote in the upgrade note today. The analysts lifted the rating on the video streaming titan to Overweight from Equal Weight with a price target of $400 per share (up from $300).
The analysts see potential for the KPIs to exceed next year as content is “clearly improving.” Moreover, the detailed AVOD analysis yielded bullish signals, leaving their new estimates above the Street for 2025.
“We think the pull-forward from COVID is now mostly digested, with global connectivity still providing a long-term tailwind of ~+8mm net adds annually before any penetration increase. We see churn improving in ’23 due to content + AVOD + paid sharing, and 10bps of churn = ~10mm subs. So, we feel better on subs, while ads drive us ahead on revenues,” the analysts said in a client note.
Moreover, Cowen analysts named Netflix a Best Large-Cap Idea for 2023 and raised the price target to $405 per share from the prior $340.
“The key drivers for NFLX’s shares in ’23 are (i) New monetization levers, including the new lower price ad tier (which could drive accelerating net member adds) and the paid sharing solution launching globally in ’23; (ii) Revenue re-accelerating in 2H23; and (iii) FCF growth ramping,” they explained in a note.
Netflix shares are trading almost 3% higher in pre-market Friday.
