In a note released on Wednesday, Bank of America declared Netflix as the undisputed “king in streaming” and predicted a significant 22% surge in its stock price. Analyst Jessica Reif Ehrlich, reiterating a “buy” rating on Netflix, increased the price target from $525 to $585, with the current stock trading at approximately $480. The analysis attributes Netflix’s triumph in the “streaming wars” to changing market dynamics over the past 18 months and a renewed investor emphasis on profitability, acknowledging that not all media companies can attain Netflix’s global reach and scale in streaming.
Ehrlich highlighted the evolving landscape as a “win-win” for Netflix, enabling increased access to third-party content for the platform. This, in turn, enhances the efficiency of Netflix’s spending strategy, as it diminishes the need to finance higher-risk new productions and allows the incorporation of well-established content. The note also anticipates sustained growth for Netflix, citing its ongoing crackdown on password-sharing in the short term and the introduction of a low-cost advertising subscription plan in the medium to long term. The ad-supported tier, priced at $6.99, is seen as an attractive option for users, and the broader password-sharing crackdown is expected to further accelerate adoption of Netflix’s ad-supported offering. The recent disclosure of over 23 million active users for the ad-supported tier supports the bank’s bullish stance on Netflix’s advertising prospects, driven by strategic pricing and new bundling agreements.