Netflix (NFLX) continues to lead its competitors in the streaming content sector and has made the right decisions to evolve from a high-growth, low-profit business to a slow-growth, high-profit business, Wedbush said in a note on Friday.
“We think Netflix has reached the right formula with global content creation, balancing costs, and increasing profitability,” Wedbush said. “We think Netflix will continue to expand profitability and generate increasing free cash flow.”
Wedbush maintained its outperform rating and $725 price target, citing the company’s advertising potential for WWE next year, game expansion, product licensing, and growth in viewership. “We think Netflix can meet expectations for EPS to more than double between 2023 and 2026,” Wedbush said.
Another dimension of Netflix’s evolution is the decision to stop reporting quarterly subscriber numbers and instead focus on regional revenue.
“The company is unlikely to be challenged by competitors, and we think it has already ‘won’ the streaming war,” the analysts said. “We think Netflix is likely to grow at least through the end of this decade, and expect consistent free cash flow growth each year.”