Morningstar lifts Netflix target but warns shares remain overvalued

Netflix shares have soared more than 47% in 2025, outperforming the broader market and leaving rival entertainment stocks trailing.

Yet Morningstar analyst Matthew Dolgin remains one of the few skeptics on Wall Street, warning that the stock is still significantly overvalued.

In a note published late Thursday, Dolgin raised his fair value estimate on Netflix to $750 from $720.

But with the stock currently trading just under $1,307, his revised target still implies a sharp 43% downside.

While the move suggests a slightly more constructive stance, Dolgin emphasized that Netflix’s growth ambitions remain too aggressive to justify its current price.

Trillion-dollar dreams face skepticism

At an internal meeting earlier this year, Netflix executives laid out plans to double revenue from $39 billion to nearly $80 billion by 2030 and generate $9 billion in global ad sales, according to reports.

The company is also aiming for a $1 trillion market valuation by the end of the decade.

Dolgin, however, argued that such targets should not be treated as a base-case forecast.

“Those targets will be very difficult to achieve and should not constitute a base-case forecast,” he wrote, adding that the company’s password-sharing crackdown is no longer a significant driver of growth.

He also questioned the sustainability of price hikes in domestic and overseas markets.

Even if Netflix hits its 2030 financial goals, Dolgin estimates the stock would be fairly valued at $1,225 — equating to a market capitalization of around $521 billion, well below the $1 trillion milestone the company hopes to reach.

The bull case for Netflix

Despite Dolgin’s concerns, Wall Street sentiment on Netflix remains bullish.

Analysts at Wells Fargo and Pivotal Research have raised their price targets to $1,500 and $1,600, respectively.

Pivotal Research Group analyst Jeffrey Wlodarczak reaffirmed his bullish stance on the stock last week, raising his price target from $1,350 to a Street-high $1,600.

He cited growing confidence in Netflix’s leadership in the subscription streaming market.

“Our positive Netflix investment view remains unchanged,” he said in a client note.

“Netflix remains underpenetrated globally, offers an extremely compelling price-to-entertainment value (that is continually improving) boosted by their ad-supported offering.”

He expects strong subscriber additions and rising revenue per user, driven by strategic price increases and continued momentum in the company’s advertising segment.

Anders Bylund of The Motley Fool argues that while Netflix may appear pricey at first glance—with valuation multiples of 60 times trailing earnings and 13.6 times sales—the company is delivering where it matters most: the bottom line.

He points out that Netflix’s trailing twelve-month earnings have nearly doubled over the past three years, while free cash flow has surged from breakeven levels to $7.4 billion.

Netflix has returned 175% over the past five years, far outpacing the S&P 500’s 97.4% gain.

Much of this growth is supported by steady user expansion. The company’s global streaming paid memberships grew by 13.5% annually over the last two years, reaching 305.6 million subscribers in the most recent quarter.

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