Stock Analysis

Netflix, Inc. (NASDAQ:NFLX) Released Earnings Last Week And Analysts Lifted Their Price Target To US$550

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It's been a pretty great week for Netflix, Inc. (NASDAQ:NFLX) shareholders, with its shares surging 13% to US$545 in the week since its latest yearly results. Netflix reported in line with analyst predictions, delivering revenues of US$34b and statutory earnings per share of US$12.03, suggesting the business is executing well and in line with its plan. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

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NasdaqGS:NFLX Earnings and Revenue Growth January 25th 2024

After the latest results, the 48 analysts covering Netflix are now predicting revenues of US$38.3b in 2024. If met, this would reflect a decent 14% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to soar 35% to US$16.70. In the lead-up to this report, the analysts had been modelling revenues of US$38.2b and earnings per share (EPS) of US$15.79 in 2024. So the consensus seems to have become somewhat more optimistic on Netflix's earnings potential following these results.

The consensus price target rose 14% to US$550, suggesting that higher earnings estimates flow through to the stock's valuation as well. 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. The most optimistic Netflix analyst has a price target of US$700 per share, while the most pessimistic values it at US$335. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 14% growth on an annualised basis. That is in line with its 14% 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 7.9% 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.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Netflix analysts - 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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Find out whether Netflix is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.