Netflix (NFLX) shares climbed on Thursday, poised to snap a brutal six-day losing streak that had seen the stock slump 15%, its worst six-day performance since May 2022. The stock rose 1.4% to $93.98 in pre-market trading as investors largely shrugged off another analyst price target reduction.
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The recent volatility centers on Netflix’s massive, $27.75-per-share deal struck last Friday to acquire the streaming and studio assets of Warner Bros. Discovery (WBD). The deal immediately ignited a hostile bidding war, with Paramount Skydance (PSKY) responding on Monday with a hostile bid to buy all of Warner Discovery for $30 per share.
Analysts Debate Netflix’s Valuation
Seaport Research Partners analyst David Joyce cut his price target for Netflix from $138 to $115, citing the ongoing uncertainty surrounding the Warner Bros. deal. Joyce, who still rates Netflix at Buy, wrote that the recent selloff was “overdone,” but noted the acquisition has forced investors to reassess the long-term growth trajectory for Netflix.
Investor concerns stem from the worry that Netflix will have to take on more debt to fund the acquisition, which some analysts deem “extremely expensive”. Pivotal Research Group analyst Jeffrey Wlodarczak downgraded his rating to Hold from Buy, labeling the deal an “$83 billion admission of long-term headwinds,” including competitive threats from short-form video apps like TikTok.
Furthermore, the aggressive bid has already altered Netflix’s valuation metric: shares are now trading at 31 times future earnings, a steep drop from about 44 times on June 30. Joyce’s new $115 price target implies that the stock could climb about 22% from its current level, based on the assumption that the company will reclaim about half of that valuation gap.
Is Netflix Stock a Good Buy Now?
Analyst sentiment for Netflix (NFLX) is rated a Moderate Buy. This is based on ratings from 38 Wall Street analysts in the last three months, with 27 analysts recommending a Buy, nine recommending a Hold, and two recommending a Sell. The average 12-month consensus price target for NFLX is $134.30. This average target represents a substantial 44.86% upside from the last closing price.
