Netflix engagement data points to stronger results ahead, Wolfe says

Investing.com -- Wolfe Research has lifted its price target on Netflix (NASDAQ: NFLX) to $95 from $84, telling clients in a note that its analysis of viewing data suggests the streamer's soft second quarter was a scheduling issue rather than a demand problem.

"After analyzing millions of data points from Netflix's viewing history, we believe the timing of new content releases was largely to blame for soft 2Q subscriber and engagement results," analyst Peter Supino wrote.

The firm noted Netflix's weakest subscriber growth quarter in years, estimated at 900,000 additions, coincided with its worst quarter of viewing across its top 10 titles since the 2023 writers' strike.

While overall viewing rose 2% in the first half, viewing of the top 10 most-watched TV shows and films fell 4%, and top 10 English-language TV viewing dropped 21% year over year.

Wolfe pointed to the release calendar as the driver. Shows that launched new seasons in the second quarter had prior seasons generating roughly 765 million viewing hours in the top 10, against 1.3 billion hours for prior seasons of titles returning in the third quarter.

On that basis, the firm expects stronger second-half results and solid 2027 guidance. The new target applies a 22 times multiple, up from 20 times, to 2028 earnings of $4.41 per share.

Wolfe also flagged live programming, which accounts for 1% of viewing hours but around 8% of top 10 titles in the U.S. and Canada.

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