Netflix double downgraded at Huber Research amid engagement, pricing concerns

Investing.com -- Huber Research double-downgraded Netflix (NASDAQ: NFLX) to Underweight from Overweight on Tuesday, telling investors that the stock is now fairly valued. The firm cut its 12-month price target to $70 from $85.

Analyst Craig Huber, whose firm does not use neutral ratings, listed six reasons for the move. He pointed to press reports that Netflix is preparing to cut headcount by 5%, noting the last significant layoffs came in the second quarter of 2022, after two quarters of subscriber losses.

Huber also flagged “ongoing fears that engagement on Netflix’s platform is stalling out,” with total global viewing hours rising 2% to 97 billion in the first half of 2026. He estimates that is down around 5% on a per-subscriber basis.

He said Netflix’s decision in mid-July to publish engagement reports once a year rather than twice, starting in the first quarter of 2027, is a bad sign. He expects the next report to be unsatisfying for investors.

The analyst also believes Netflix will have to be less aggressive on U.S. price increases, having raised prices at the start of both 2025 and 2026, leaving it more reliant on international markets.

Huber remains bothered by Netflix’s attempted purchase of Warner Bros. Discovery’s studio and streaming operations 10 months ago, and by management saying it remains open to acquisitions.

He said that “would likely be seen by the market (and us) as Netflix needing to do a large deal in order to maintain its leading position.”

He added that competition from YouTube, Disney+ and Amazon Prime will require continued increases in content spending.

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