Investing.com -- Wells Fargo has resumed coverage of Netflix at Equal Weight, arguing the company is returning “back to Plan A: invest for growth” following the collapse of its pursuit of Warner Bros. Discovery.

Analyst Steven Cahall wrote that Wells Fargo expects Netflix “to rebound from the WBD saga by aiming to accelerate engagement with more content.”

The firm’s estimates for both content spending and forward revenue sit “a bit above Street,” while its margin outlook is “a bit below.” Cahall added that “25-30x P/E is the new range” for valuing the stock.

Wells Fargo believes Netflix’s decision not to raise its bid for Warner Bros. Discovery underscores its commitment to its original strategy.

“We think WBD was NFLX’s opportunistic Plan B,” the note said. “Now it’s back to Plan A: invest for growth.”

Netflix has highlighted plans for roughly $20 billion of content spending this year, a level Wells Fargo expects to grow into 2028.

The firm also expects Netflix to be aggressive in sports, noting an upcoming NFL renewal and estimating the company could go for 10-20 games/season at an annual cost of around $500million to $1 billion.

Wells Fargo said the lesson for NFLX from the appeal of HBO is to build an internal unit “focused only on quality originals.”

Engagement remains central, as Netflix “knows all eyes are on these data points.”

The bank has a $105 price target on the stock, saying content investment and engagement will define valuation.