Netflix (NFLX) is set to see growth in Q4 and 2024 since it benefits the most as the industry raises prices, consolidates platforms, reduces spending, and focuses on licensing, UBS said in a note emailed Thursday.
Netflix is set to report its Q4 results on Jan. 23.
Analysts, including John Hodulik, expect Q4 subscription growth of 9 million subscribers, largely in line with the previous quarter’s 8.8 million users. Guidance for Q1 is set to indicate continued growth, although subscribers are expected to be seasonally softer, but better year over year.
The analysts predict the Q4 average revenue per user, or ARPU, to stay the same due to limited price increases, but expect 2024 ARPU growth to speed up from likely new price increases and accumulated benefits from paid sharing.
The investment firm said that their estimate assumes Netflix will prioritize pricing in 2024, after focusing on paid sharing in 2023, potentially resulting in moderating subscriber growth, but improving average revenue per member.
Management is expected to maintain its margin guidance, and $6.2 billion in expected free cash flow in 2024, despite a $17 billion cash content spend, the analysts added.
UBS raised Netflix’s price target to $560 from $500, while maintaining buy rating.