Netflix (NFLX) stock gains as Jefferies upgrades to Buy on 2024 outlook

Shares of Netflix (NASDAQ: NFLX) are moving higher in pre-open Thursday after Jefferies analyst Andrew Uerkwitz upgraded to Buy from Hold.

The analyst also raised the price target by $75 to $385 per share despite cutting 2023 EPS estimates by 9%. Uerkwitz believes that new initiatives, namely AVOD (advertising-based video on demand) and password-sharing changes, will drive top-line outperformance. However, these are not likely to happen in the near term.

“We’re upgrading Netflix to buy based our belief that a well executed strategy of launching AVOD with password sharing changes will drive revenue and adj EBTIDA well above Street estimates, resulting in margin upside and valuation expanding back towards historical averages,” the analyst wrote in a client note.

Netflix could generate more than $40 billion in revenue by 2024, fueled by a $6-7B boost from AVOD and incremental SVOD (subscription video on demand) members. Jefferies also estimates that adjusted EBITDA could come in at $10.9B in 2024. Both estimates are above the current Street consensus.

Netflix stock is up 1.5% in pre-market Thursday.

By Senad Karaahmetovic

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