Netflix Inc. shares have been cruising this year, but Wall Street's biggest bull says the party can keep roaring on.
Pivotal Research Group analyst Jeffrey Wlodarczak boosted his price target on Netflix's stock $(NFLX)$ to $1,100 from $925. The new target is the highest listed on FactSet and implies more than 25% upside from current levels. Netflix shares have already gained 80% over the course of 2024.
Wlodarczak is encouraged by Netflix's recent streaming of the fight between Jake Paul and Mike Tyson, which he said "mostly" proved successful, with the exception of some technical issues for certain viewers.
"We view the event as a (very) successful learning experience for [Netflix] and expect these technical issues will not happen again with future live events," he wrote. "Importantly, given the success of the Tyson/Paul fight we expect Netflix to accelerate its offerings of 'eventized' live programming, which further enhances [Netflix's] ability to offer households regular compelling content."
Live programming could be a differentiator for Netflix that helps the company reduce subscriber churn and ultimately increase prices, he noted.
Netflix already stands out per the metrics most important to Wall Street, according to Wlodarczak. The company "is demonstrating massive scale as it continues to produce strong subscriber results and large free cash flow with the ability to invest to accelerate that growth," he wrote. By contrast, peers are still losing money while "resorting to aggressive price hikes amidst generally mediocre subscriber results."
He continues to view Netflix as the global winner of the streaming wars.
"The key for [Netflix] going forward is to press their advantages and keep the subscriber/[average-revenue-per-user] flywheel going because the larger they get the more leverage they have over their peers/content creators, the better their product gets ... and the bigger the moat grows around their core business model," Wlodarczak said.
He also said there's potential for Netflix's management to conduct a stock split next year, as Nvidia Corp. $(NVDA)$, Chipotle Mexican Grill Inc. $(CMG)$ and others did this year. Stock splits can further energize retail investors.
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