Jefferies sees potential for Netflix missing on new subs, remains cautious on stock

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By Senad Karaahmetovic

Jefferies analysts raised the price target on Netflix (NASDAQ:NFLX) stock to $310 per share from the prior $250. Despite the raised price target, which implies a downside potential of around 3%, they reiterated a Hold rating and offered cautious comments on Netflix stock.

Based on the latest consumption data on Netflix’s platform, the analysts see potential for Q4 subs growth coming “in-line to a miss,” driven by weakness in international markets. The analysts' estimates are below Street for both Q4 and Q123.

“We gradually catch up as AVOD gets rolled out and conversions happen. By end of 2024, we are 7% above Street,” they stated in a client note.

On the introduced ad-tier, Jefferies estimates that AVOD (advertising-based video on demand) + incremental SVOD (subscription video on demand) members from password sharing will be contributing around $6 billion - $7 billion in revenue by 2024.

All-in-all, they are “cautious into the quarter” and urge the firm’s clients to wait for a better entry point in the Netflix stock.

“We may be getting nuanced in our call, but if our model and view are correct - add in the uncertainty of the macro and impact to Netflix consumer sentiment with an ad tier - we believe we could get a better entry price on our long-term thesis,” the analysts concluded.

Netflix stock closed at $320.34 yesterday, 1.64% higher on the day.