Netflix (NFLX) is Approaching the Inflection Point for Free Cash Flow Generation, Morgan Stanley Reiterates $650 PT

Morgan Stanley analyst Benjamin Swinburne reiterated an Overweight rating and $650.00 price target on Netflix (NASDAQ: NFLX) on the belief that the company is approaching the inflection point for substantial FCF generation. The year 2020 was marked by accelerated streaming adoption leading to global scale of roughly 200mm paid subscribers.

The analyst stated "As additional subscriber penetration gains and recent price increases roll through financials this year, we believe Netflix's path to sustainable positive FCF generation is becoming increasingly clear. At roughly 20% operating margins, we conservatively estimate Netflix generates over $6bn in operating income for '21. This compares to guidance for '21 FCF to range from $1bn in losses to break-even. With steady margin expansion from growing scale (33-34% EBIT margins in '25E) and the convergence of cash vs. GAAP margins as original production matures, we believe Netflix could generate over $23bn in cumulative FCF over the subsequent four years ('22-25E)".

For an analyst ratings summary and ratings history on Netflix click here. For more ratings news on Netflix click here.

Shares of Netflix closed at $503.00 yesterday.

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