KeyBanc Raises Netflix Price Target to $1,000

Investing.com — KeyBanc Capital Markets has increased its price target for Netflix (NASDAQ:NFLX) from $785 to $1,000 per share, attributing this decision to a mix of historical outperformance, decreasing competition, and a promising outlook for revenue and free cash flow (FCF) growth.

The firm has maintained its Overweight rating on the stock, expressing confidence in Netflix’s ability to outperform the S&P 500 through 2025.

Analysts noted that Netflix’s shares are currently trading at about 9x next-twelve-month (NTM) enterprise value-to-sales (EV/S), a level that usually indicates peak valuation. However, they suggested that "this time may be different," highlighting Netflix’s shift from focusing on paid net subscriber additions to prioritizing engagement and viewership.

KeyBanc analysts commented, "Live events and returning originals are expected to attract users and advertisers." They emphasized that Netflix’s profit advantage over its peers should help sustain viewership gains.

These aspects, along with the platform's strong monetization potential and FCF generation, support the analysts’ optimistic outlook. The bank also noted that Netflix’s reputation as a "share winner" has greatly influenced its performance over the years.

KeyBanc observed: "During these periods, the median return above the S&P 500 has exceeded 90%, and the NTM EV/S multiple typically peaks between 9-10x."

Although there are risks of high valuation at this level, the firm pointed out unique catalysts, including Netflix's capacity to monetize its significant viewership advantage.

Even with slight reductions in EPS estimates for 2024 and 2025 due to foreign exchange impacts, KeyBanc reaffirmed its faith in Netflix's medium-term growth.

The analysts argued that Netflix’s consistent over 10% revenue growth and more than 20% EPS growth should warrant a premium over the company’s three-year median P/E of 30.4x, justifying the $1,000 price target based on 32.5x 2026 estimated EPS of $30.80.