Netflix ad growth could drive upside, Redburn Atlantic says

Investing.com --Redburn Atlantic said Wall Street is underestimating Netflix (NASDAQ: NFLX)'s advertising potential, as it forecast ad revenues to jump from 4% of total sales in 2024 to 20% by 2028.

“We believe our highly detailed bottom-up advertising forecast is both original and differentiated. In particular, we think the market has not fully appreciated the fact that Netflix is currently selling so little of its ad inventory and is therefore underestimating the ad revenue opportunity,” analyst said.

The brokerage expects Netflix to generate $12 billion in ad revenue by 2028, citing the company's low fill rate, selling less than half of its ad inventory, as a key growth lever. It sees improvements coming from expanded partnerships, Netflix's in-house ad technology, and rising adoption of the ad-supported tier.

Redburn also highlighted international subscriber growth as a near-term opportunity, pointing to record Q4 net additions of 19 million. It maintained a "Buy" rating and a $1,145 price target, saying its EPS estimates for the next four years are 1%-15% ahead of consensus.

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