Netflix, Spotify targets raised at JPMorgan ahead of earnings

JPMorgan raised its price target for Spotify (NYSE: SPOT) to $320 from $280 and Netflix (NASDAQ: NFLX) to $650 from $610 per share in a note Monday, maintaining an Overweight rating on both ahead of their earnings releases.

For Spotify, the investment bank said it remains bullish. JPMorgan is confident that SPOT can deliver revenue growth acceleration, sequential gross and operating margin expansion, and meaningfully higher free cash flow in 2024.

Ahead of the first quarter earnings release, JPMorgan tweaked its first quarter monthly active users (MAU) and premium subscriber net adds ~1 million above Spotify's guide. They now see 1Q MAUs of 619 million and premium subscribers of 240 million.

The bank also remains bullish on Netflix, noting that the rollout of paid sharing supported strong subscriber and revenue growth in 2023. JPMorgan estimates NFLX monetized ~22 million borrowers at the end of 2023, including 13 million of the 30 million total net adds last year.

"While the lowest hanging fruit was captured in 2023, we believe Netflix still has meaningful Paid Sharing monetization opportunity as it tightens filters across specific use cases & borrower cohorts," wrote the bank. "We believe NFLX needs to reach ~50M ad tier MAUs by year-end, which could prove conservative when factoring in bundled sub shifts w/T-Mobile & others."

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