Investing.com -- Bernstein analysts see the recent pullback in Netflix (NASDAQ:NFLX) shares as a buying opportunity, reiterating their Outperform rating with a $1,200 price target in a note Thursday.
“Netflix: quality for sale,” stated the firm, acknowledging that the stock is “down >10% from its peak in February after reporting their blowout Q4’24 quarter."
While the stock has partially rebounded, they believe "near-term macro uncertainties could lead to continued volatility, creating an opportunity for an attractive entry point."
Concerns around tariffs, subscriber churn following Christmas NFL games, and declining engagement have weighed on sentiment.
However, Bernstein remains bullish, arguing that "Netflix’s top-line growth, driven by subs, far exceeds content spend growth, leading to expanding margins that are already best in class."
The firm highlighted three key trends supporting its view. Firstly, they said that engagement remains strong.
"Total consumption increased in Q4’24, and trends into Q1’25 suggest higher consumption in line with increased subs base," wrote Bernstein.
While some short-term fluctuations occur based on the content slate, Bernstein believes the broader trend remains healthy, noting that "decline in consumption observed post the holiday season coming into Q1 is in line with user consumption behavior observed in ‘23 and ‘24.
Furthermore, they believe that Netflix offers the best value for money. The analysts argue that "Netflix has the highest utility and value based on engagement and cost," which implies "the highest pricing power for years to come."
While seasonal churn and tariffs may temporarily affect subscriber growth, they ask, "what’s the alternative for the consumers? Nothing like 20 minutes of browsing tiles for $8/month."
Finally, Bernstein feels that plenty of growth potential remains. "International market penetration has gone up steadily over the years, and most markets are still under-penetrated (e.g., Japan is
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