Netflix Inc.’s stock surged more than 3% on Wednesday after a bullish note said the video-streaming giant has a “clear path” to jacking up revenue.
Oppenheimer analysts said average revenue per membership will accelerate as the company NFLX, +3.48% hauls in ad sales through a new service, raises subscription prices and cracks down on password sharing.
“Overall, these initiatives should boost revenue by ~40% vs. [fiscal 2022] at very high incremental margins,” said the analysts, who have an outperform rating and a price target of $515. “We think the complexity of the multiple drivers are being underappreciated by investors, as we have only seen 2% of the benefit so far.”
They added: “Our analysis indicates a clear path back to double-digit revenue growth, which should support ~25x [price to earnings].” They predict a positive impact from Netflix’s paid sharing and advertising tier through fiscal 2025.
Oppenheimer said Netflix is poised to recapture half of account-sharing households, with its estimates implying Netflix will directly recapture 46% of the total estimated 100 million account sharers by the end of 2025.