Netflix, Inc. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

Investors in Netflix, Inc. (NASDAQ:NFLX) had a good week, as its shares rose 7.1% to close at US$764 following the release of its third-quarter results. The result was positive overall - although revenues of US$9.8b were in line with what the analysts predicted, Netflix surprised by delivering a statutory profit of US$5.40 per share, modestly greater than expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Netflix

Taking into account the latest results, the current consensus from Netflix's 44 analysts is for revenues of US$43.7b in 2025. This would reflect a meaningful 16% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to surge 29% to US$23.52. Before this earnings report, the analysts had been forecasting revenues of US$43.4b and earnings per share (EPS) of US$23.00 in 2025. So the consensus seems to have become somewhat more optimistic on Netflix's earnings potential following these results.

The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 5.1% to US$748. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Netflix at US$925 per share, while the most bearish prices it at US$550. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of Netflix'shistorical trends, as the 13% annualised revenue growth to the end of 2025 is roughly in line with the 12% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 8.8% per year. So although Netflix is expected to maintain its revenue growth rate, it's definitely expected to grow faster than the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Netflix following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Netflix going out to 2026, and you can see them free on our platform here.

It might also be worth considering whether Netflix's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.