Shares of Netflix ( NFLX ) soared double digits on Wednesday, gaining a hefty 14% after the streaming giant reported strong fourth-quarter profits with more than 13 million subscribers.
Wall Street overwhelmingly praised the report, with analysts raising their price targets across the board.
Still, some companies are warning of overvaluation, while others are advising clients to stay on the sidelines, at least for now.
Some analysts say Netflix's double-digit subscriber growth may not be sustainable as the company's crackdown on password sharing is gradually completed.
“While we expect subscriber growth to remain relatively strong, the catalysts that led to last year's strong growth will likely remain in 2024,” Morningstar analyst Matthew Dolgin said in a note Wednesday. I think the situation will subside significantly.” “But a sober look at the level of net membership growth should not obscure how impressive Netflix is doing.”
However, despite its strong performance, the analyst, who raised his price target from $410 to $425, said, “While we expect Netflix to continue to dominate, the stock is moving ahead of the curve.'' “There is,” he warned.
Moffett Nathanson expressed a similar view. “Current subscriber growth in the US/Canada and Western European markets represents a boost from the ‘intervention’ of the most avid password sharers, and we are concerned that this could create a pocket of subscriber headwinds.” ” mid-year. ”
In other words, most of the juice from password enforcement has been squeezed out.
Analyst Michael Nathanson said: “This hike, combined with a potential surge in cancellations due to a higher cap on Netflix's price tag, could surprise the market and reset Netflix's multiples again.” Stated. As a result, he maintained his rating on the stock at “neutral.”
Deutsche Bank also warned against the streamer's rating, downgrading it from “buy” to “hold.”
“Netflix remains the best story in media among vertically integrated producers/programmers/distributors,” wrote lead analyst Brian Kraft. “However, we believe Netflix's leadership position is fully priced in at this level of stock price.”
Kraft raised his price target to $525 from $460, writing, “We see little room for multiple expansions here, given that we believe EPS growth will peak in 2024.” added.
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