Netflix (NASDAQ:NFLX) has been sitting pretty prior to the release of its Q2 2024 report, slated for release next Thursday (July 18th). The stock is up over 49% in the past 12 months, and almost 35% this year alone.
Indeed, the streaming giant has recovered nicely from the slump that followed the release of its Q1 numbers, when a combination of a disappointing outlook and Netflix’s decision to stop reporting subscriber numbers altogether starting next year saw the share price fall in the aftermath.
The stock has since clawed its way back up, and now hovers slightly under its all-time high, reached back in November 2021.
Will the good times continue to roll next week when Netflix posts its Q2 numbers and guidance? TD Cowen analyst John Blackledge believes they will. “Netflix continues to benefit from paid sharing initiatives, strong underlying biz demand, and burgeoning ad tier,” said the 5-star analyst.
Blackledge is particularly bullish regarding Netflix’s advertising option (AVOD), a lower-cost subscription alternative that appeals to more cost-conscious consumers. Recall, in Q1 AVOD members grew by 65% quarter-over-quarter.
As such, while Blackledge’s Q2 paid net adds estimate remains the same, the analyst has raised his Q3 global paid net adds forecast from the prior 4.081 million to 5.246 million. Netflix is also set to retire its basic service option in the UK and Canada, and that should further boost “ad tier momentum.”
On a side note, going by a recent survey conducted by Cowen, it looks like Netflix’s position as the top dog in streaming is not under any threat for now. Consumers were asked which platform they use most often to view video content on their TV, and Netflix kept the leading spot in 2Q24 claiming 23% amongst respondents. “We think Netflix’s broad catalog across multiple genres creates a durable advantage over time,” Blackledge went on to say.
It comes as no surprise, then, that ahead of the Q2 print, Blackledge reiterated a Buy rating, and raised his 12-month price target to $775 – up from $725. There’s potential upside of 18% from the current price. (To watch Blackledge’s track record, click here)
Netflix gets plenty of support on Wall Street, although not all are on board. The 36 ratings from the last 3 months split into 23 Buys, 12 Holds, and 1 Sell, making the analyst consensus a Moderate Buy. Some appear to think the shares have surged enough for now as the average price target stands at $665.14, suggesting the stock will remain rangebound for the time being. (See NFLX stock forecast)
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