Netflix Secures Funding at Piper Sandler: ‘Multiple Levers to Support Ongoing Momentum’

Piper Sandler has upgraded Netflix to an Overweight rating from Neutral, citing numerous growth opportunities and a positive long-term outlook for the streaming powerhouse.

The firm has raised its price target for Netflix to $800, up from $650, underscoring the company’s dominant position in the streaming market.

In their analysis, the analysts acknowledged that despite Netflix’s high valuation, it is “expensive for a reason.” They believe several growth factors are at play, particularly in Netflix’s non-ad-supported offerings, where pricing power remains robust.

With strong pricing power, subscriber growth does not need to be as aggressive as in the past to support double-digit revenue growth, the analysts explained. They highlighted the potential for Netflix to implement regular price increases in key markets, especially as its content roster becomes more robust.

Another significant aspect is the ad-supported tier of Netflix, which the firm notes appears more stable as they approach the next year.

Piper Sandler sees achieving critical mass by 2025 as a significant milestone, noting that partnerships with third-party demand-side platforms could facilitate this goal. They indicated that hitting this critical mass may lead to positive surprises in 2025.

Regarding profitability, analysts believe Netflix’s margin projections could be conservative, especially for 2025 and 2026. They anticipate that non-content costs will increase at half the rate of revenue growth over the next few years, which should support further margin expansion.

With streaming continuing to dominate television viewership and Netflix capturing 20% of streaming time, Piper Sandler expresses confidence in the company’s ability to uphold its leadership in the industry. The analysts expect a strong long-term outlook for Netflix as it advances its strategic initiatives.