Netflix has been making waves on Wall Street, and according to UBS analysts, the streaming service’s good fortune is set to continue with a major earnings beat next week.
Since January, Netflix’s stock has soared by 49%, thanks in part to the introduction of an advertising-supported tier and its efforts to crack down on password sharing. On Wednesday, the stock rose by 0.7% to reach $443.30.
If UBS is correct, these gains are just the beginning. Led by John Hodulik, the UBS team predicts that Netflix will not only surpass its own guidance for second-quarter earnings but also gain even more strength in the months ahead.
In a research note, Hodulik stated, “We are raising our estimates following positive data on paid sharing. Our checks on engagement, downloads, and search interest all suggest that the newly launched paid sharing markets are performing well.”
Impressed by these projections, the UBS analysts have raised their target price for Netflix to $525 from $390 and maintained a Buy rating for the stock. They value the company at 23 times its expected earnings before interest, taxes, depreciation, and amortization in 2024.
While a post-earnings boost would certainly be welcome, investors are also looking ahead to the next six months to determine if Netflix can sustain its success amidst concerns about a potential slowdown in the tech sector.
Hodulik wrote, “We believe Netflix will be the main beneficiary as its competitors prioritize profits in streaming.”