Penn Badgley as Joe Goldberg in the Netflix series ‘You.’
John P. Fleenor/Netflix
Bullish sentiment on Netflix grew heading into the company’s third-quarter earnings report due after the close of trading on Tuesday.
A flurry of optimistic research notes about the outlook for the streaming-video giant went out as analysts turn increasingly upbeat about its fourth-quarter streaming content slate, despite controversy over David Chappelle’s latest stand-up comedy special on the network, which has been criticized for mocking transgender people.
Friday brought another batch of enthusiastic commentary on the stock.
Evercore ISI analyst Mark Mahaney added Netflix to his firm’s “tactical outperform” list, while reiterating his Outperform rating and $695 target price. He writes in a research note that the company has “an impressive lineup” of fourth-quarter content, including new seasons of four of the service’s most popular shows based on viewing hours—The Witcher, Money Heist, Tiger King, and Emily in Paris.
He also points to the success of Squid Game, which co-CEO Ted Sarandos has said could turn out to be the most successful Netflix series ever. And he sees the strong slate continuing in 2022, with new seasons of Stranger Things, Ozark, Bridgerton, and The Crown, among others.
Wrote Mahaney: “While we view the likelihood of significant price appreciation on the print to be relatively low, we believe that given the continued content slate strength heading into 2022, the risk-reward favors the upside and any potential weakness to share prices on the print would be short-lived.”
Morgan Stanley analyst Benjamin Swinburne repeated his Overweight rating on Netflix shares, moving up his target to $675 from $650. He wrote that 2022 should be “a year of healthy and accelerating net [subscriber] additions, as the rebuilt content pipeline hits the services, starting in Q4.” He is projecting 25 million net adds in 2022, with particular strength in Europe and Asia.
Piper Sandler analyst Thomas Champion also weighed in, confirming his Overweight rating and lifting his price target to $705 from $600. He wrote in a research note that his bullish stance reflects both a strong content slate overall and the recent success of Squid Game in particular.
Champion said Piper surveyed more than 1,500 U.S. viewers, including about 500 Netflix subscribers, and found that 44% of U.S. subscribers have already watched Squid Game. And he said that 24% of those who saw it subscribed or renewed specifically to watch the show.
Write to Eric J. Savitz at [email protected]
