Netflix: Advertising-Led EPS Growth and Compressed Valuation Support Overweight/Buy Recommendation Despite Warner Bros. Deal Risks

Analyst Benjamin Swinburne from Morgan Stanley maintained a Buy rating on Netflix and decreased the price target to $110.00 from $120.00.

Benjamin Swinburne has given his Buy rating due to a combination of factors tied to Netflix’s growth, profitability, and valuation. He expects Netflix to deliver more than 20% annual adjusted EPS growth through 2028 as it scales its already dominant global streaming platform, while still expanding margins despite higher operating and content spending. He also highlights the rapid build-out of Netflix’s advertising business, which is growing at a triple-digit pace and is projected to surpass $3 billion in revenue by 2026, adding a new, high-margin growth engine. Although recent engagement metrics were only modestly positive and near-term trading could remain constrained, he views the company’s consistent record of meeting or beating its guidance as a key support for the long-term case.
At the same time, Swinburne acknowledges risks around the Warner Bros. (WB) transaction but argues that these are largely reflected in the current share price, given the sharp compression in Netflix’s forward P/E multiple from above 45x in mid-2025 to the mid‑20s now. With more than 80% of the combined company’s revenue still coming from streaming, he believes the core business remains the primary value driver. He also sees potential upside if the WB deal proves accretive to GAAP earnings and enhances returns on content investment. Overall, he concludes that for investors with a longer time horizon, the stock offers an attractive risk/reward profile, supporting his Overweight/Buy recommendation.

In another report released today, Canaccord Genuity also maintained a Buy rating on the stock with a $125.00 price target.

Based on the recent corporate insider activity of 171 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of NFLX in relation to earlier this year.