Netflix stock price target raised ahead of Q2 earnings: Analysts see 20% upside potential

Netflix Inc (NASDAQ: NFLX) has already surged about 40% this year, and analysts are bullish on its continued growth. 

Morgan Stanley’s Benjamin Swinburne has reiterated his “overweight” rating on Netflix, projecting further gains as the company prepares to release its Q2 financial results on July 18th.

Swinburne raised his price target on Netflix stock to $780, indicating a potential 20% upside. 

He attributes this optimism to Netflix’s robust performance and expects “continued strong results heading into the second half of 2024.”

Despite its impressive performance, Netflix remains unattractive for income investors as it does not pay a dividend. Watch here: https://www.youtube.com/embed/V6JNx_H7FKw?feature=oembed

TD Cowen is also bullish on NFLX

TD Cowen’s John Blackledge recently raised his price target for Netflix to $775. 

Both Blackledge and Swinburne highlight Netflix’s successful monetization of password sharing and new revenue streams such as gaming, advertising, and potentially live sports as key drivers for growth.

Netflix’s extensive catalogue across multiple genres is seen as a significant advantage. 

Further pricing increases in major markets could also act as catalysts for growth. 

These bullish calls come after Netflix laid off employees in its film department earlier this year, demonstrating its focus on cost efficiency and strategic growth.

Netflix shares have been on a consistent uptrend since May 2022, generally making higher highs and higher lows over the past two years. In February, the 50-week moving average (MA) crossed above the 200-week MA, forming a bullish golden cross pattern.

However, several technical indicators now suggest a potential slowdown in buying momentum. Firstly, trading volumes have remained below average this year compared to 2022 and 2023. Secondly, as Netflix’s stock rallied to a multi-year high last week, the relative strength index (RSI) formed a bearish divergence by making a relatively lower high. Finally, the stock has attempted to break out to a new record high in recent weeks but has been unsuccessful.

What to expect from Netflix Q2 earnings

Netflix is set to report its Q2 financial results this week, with expectations of a 16% revenue increase to $9.49 billion. 

Analysts predict the streaming giant will earn $4.7 per share in Q2, up from $3.29 per share a year ago.

Investors will be particularly interested in subscriber growth, especially in the ad-supported tier. 

While Netflix added 9.3 million new subscribers in Q1, sequential growth in Q2 is expected to slow due to “typical seasonality.”

International sales will also be closely watched as a potential growth catalyst.

In a recent statement to shareholders, Netflix emphasized its unique combination of a strong content slate, superior recommendations, broad reach, and intense fandom, which drives healthy engagement and continued business growth.

In summary, as Netflix prepares to release its Q2 earnings, analysts remain optimistic about its growth prospects. With new revenue streams and strategic market positioning, the streaming giant is poised to maintain its upward trajectory, offering significant upside potential for investors.

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