After Q2's 33% FCF drop sent NFLX to $74, 24/7 Wall St. rates it a BUY at $178, implying 140% upside over 12 months.
Netflix's 33% operating margin doubles Disney's, and Spotify's premium valuation confirms investors pay up for scaling subscription platforms.
Netflix's ad tier captures over 60% of new sign-ups, with the advertiser base up 70% to 4,000+ clients and ad revenue targeting $3 billion.
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Following a bruising Q2 earnings response that dropped the stock to $74.35, our proprietary model says Netflix (NASDAQ:NFLX) is severely mispriced.
The 24/7 Wall St. price target for NFLX is $178.11, implying 139.56% upside over the next 12 months. Our recommendation is buy, with confidence at 90%. That figure runs well above the $112.17 Wall Street consensus target.
The fundamentals remain intact. Forward EPS of $9.8 at reasonable multiples leaves substantial room above today's price, and the ad business is only now starting to compound.
NFLX is off 40.53% over one year and 20.7% year-to-date.
Q2 revenue of $12.559 billion missed the $12.581 billion consensus by 0.17%, while EPS of $0.80 beat the $0.7883 estimate by 1.48%. Free cash flow collapsed to $1.53 billion from $2.27 billion, a 32.73% drop that spooked investors more than the small top-line slip.
Management flagged that content amortization was front-loaded in H1 and will moderate in H2. Full-year 2026 guidance was narrowed to $51 billion to $51.4 billion with a 31.5% operating margin and roughly $12.5 billion in FCF, with ad revenue projected to roughly double to $3 billion.
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Regional growth is broad-based: LatAm 21%, APAC 16%, EMEA 14%, and North America 10%. The advertiser base is up 70% YoY to 4,000+ clients, and the ad-supported tier accounts for over 60% of new sign-ups in ad markets.
Netflix is deploying generative AI across roughly 300 titles and its full advertising lifecycle. Q2 buybacks were $4.7 billion, the largest quarter ever, with $27.1 billion remaining authorized.
Our bull-case scenario prices NFLX at $191.05. A widely circulated r/wallstreetbets post announced a $300,000 double-down on the stock, drawing 591 upvotes post-report.
Source: Yahoo Finance Top News — This article was automatically imported from the source. Read full article at original source →
