Netflix Inc. (NFLX) faced price target reductions from Wall Street analysts ahead of its fiscal second-quarter earnings on Thursday. Morgan Stanley's Sean Diffley lowered the price target to $90 from $115 while maintaining an Overweight rating, and Barclays cut its target to $85 from $110 with an Equal Weight rating. Analysts cited concerns that recent subscription price increases, seasonal weakness, and a lighter content slate may have increased subscriber churn beyond normal levels.
Morgan Stanley Cuts Netflix Price Target to $90, Maintains Overweight Rating
Sean Diffley at Morgan Stanley reduced the price target on Netflix shares to $90 from $115 while keeping an Overweight rating. The new price target implies a 22% upside to the stock's last closing price. The brokerage stated that investors remain concerned that a previous subscription price increase, combined with a traditionally slower seasonal period and a lighter lineup of new programming, may have led to higher-than-normal customer cancellations.
Despite these concerns, Morgan Stanley expects Netflix's Q2 results to be in line with analysts' estimates. The firm also anticipates the company's Q3 outlook to match Street expectations and believes Netflix will reaffirm its 2026 financial guidance. Netflix stocks inched up 0.3% overnight on Tuesday.
Barclays Lowers Price Target to $85, Cites Media Deal Activity Focus
Barclays lowered its price target on the streaming giant to $85 from $110 while maintaining an Equal Weight rating. The move was part of the firm's broader review of media companies ahead of Q2 earnings announcements. The firm stated that investors are increasingly focused on deal activity across the media industry, including announced and rumored transactions, rather than solely on quarterly operating performance.
Barclays noted that even if advertising trends deliver upside surprises, broader industry developments may dominate investor attention during the earnings season. Netflix has walked away from potential deals involving Warner Bros. Discovery (WBD) assets and failed to win the bidding contest for Roku (ROKU). Analysts at Oppenheimer, KeyBanc, Citi, and Bernstein also slashed their price targets for Netflix because they believe the stock's valuation is high, but they kept positive ratings, pointing to the company's strong long-term growth prospects.
Analysts Expect $12.58 Billion Revenue for Q2 Earnings
Netflix will report Q2 earnings on Thursday. Analysts expect $12.58 billion in revenue and $0.79 per share, according to Fiscal AI data.
Retail Traders Maintain Bullish Sentiment on Stocktwits
On Stocktwits, retail sentiment around the stock remained in bullish territory. The stock saw a 22% increase in message volume over the past week with a 0.1% gain in watchers. One user stated that Netflix is attractive at current levels and grabbed some shares for an IRA account while hedging with further-out covered calls. Another user noted that despite a sharp decline in its stock price, Netflix continues to post strong business performance, and the gap between the company's improving fundamentals and its falling share price suggests the stock may be undervalued.
NFLX stocks have slumped 21% year-to-date.
FAQ
What price targets did Morgan Stanley and Barclays set for Netflix stocks?
Morgan Stanley's Sean Diffley lowered Netflix's price target to $90 from $115 while maintaining an Overweight rating. Barclays cut its price target to $85 from $110 while keeping an Equal Weight rating.
Why did analysts reduce Netflix's price targets ahead of Q2 earnings?
Analysts cited concerns that recent subscription price increases, seasonal weakness, and a lighter content slate may have increased subscriber churn beyond normal levels. Barclays also noted increased investor focus on media industry deal activity rather than quarterly operating performance.
What are analysts expecting for Netflix's Q2 earnings?
Netflix will report Q2 earnings on Thursday. Analysts expect $12.58 billion in revenue and $0.79 per share, according to Fiscal AI data.
