By Senad Karaahmetovic
BofA analysts upgraded shares of Netflix Inc (NASDAQ:) to Buy with a price target of $370 per share. The price target implies an upside potential of over 20% with analysts saying the risk-reward in Netflix stock is “favorable.”
The streaming giant is seen as a category leader thanks to its global scale, strong brand, and superior user experience.
“Despite slower sub growth, we believe efforts to improve monetization via a value-oriented ad tier and significant conversion of password sharers has the potential to drive operating/financial upside,” the analysts said in a client note.
Bank of America analysts expect to see a 9% revenue CAGR and a 10% EBITDA CAGR from 2021 to 2024. The number of subscribers could exceed 250 million by 2024.
They are especially positive on the company’s entry into AVOD (advertising-based video on demand), which is expected to yield additional value.
“We believe that Netflix’s AVOD offering will be accretive due to: (1) the company’s ability to drive engagement; (2) extraordinary advertiser demand for its inventory due to Netflix’s ability to reach younger demos and offer exposure to cordcutters and cord-nevers; (3) likelihood of receiving premium CPMs; and (4) potential to drive incremental subscriber growth by expanding the long term total addressable market (TAM) with support from addressing password sharing,” the analysts added.
As of 09:20 ET (14:20 GMT), Netflix stock trades about 3.5% higher.
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