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JPMorgan Awaits Confidence in Netflix Subscriber Growth

Stock Markets Aug 09, 2022 12:38
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By Sam Boughedda

Investing.com - A JPMorgan analyst maintained a Neutral rating and $240 price target on Netflix (NASDAQ:NFLX) shares Tuesday, telling investors in a research note that there has been a narrative shift.

"NFLX shares have traded up +16% since reporting 2Q earnings (vs. the SPX +5%) as the narrative shifts toward the company's improved FCF outlook & the 2023 launches of the Ad-Supported Tier & Paid Sharing, despite only modest Sub growth expected in 2H22," said the analyst. "We believe NFLX has urgency around both accelerating Revenue growth and driving greater FCF, w/the latter supported by flattish content spending over the next couple years."

The JPMorgan analyst explained that the streaming giant is a "key beneficiary" of and driver of the ongoing disruption of linear TV, with the company's content performing well globally and driving a virtuous circle of strong subscriber growth, revenue, and profit.

"We expect NFLX to continue benefiting from the global proliferation of Internet-connected devices and increasing consumer preference for on-demand video consumption over the Internet, with NFLX approaching 250M global paid subs by 2026. That said, NFLX is facing subscriber growth slowdown following outsized pandemic-driven gains, increased competition, slowdown in adoption of connected TVs, & macro/geopolitical factors," added the analyst.

The analyst concluded that with limited visibility into Netflix's near-term subscriber growth, they remain on the sidelines and await greater confidence in restoring subscriber growth and reaccelerating revenue.

Netflix shares are down 2.3% Tuesday.

 

JPMorgan Awaits Confidence in Netflix Subscriber Growth
 

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