By Nate Wolf

Netflix shareholders have had plenty of reasons to smile over the last few year -- and they shouldn't expect the party to end anytime soon, some analysts say.

The stock is up 33% so far in 2025 has gained a staggering 507% over the last three years as of Thursday's close, according to Dow Jones Market Data. Shares were in the green again Friday, hovering around the $1,200 mark Netflix hit earlier this month.

While some on Wall Street think the company's valuation has caught up to its underlying performance, analysts at Evercore ISI hiked their price target to $1,350 from $1,150 and reiterated an Outperform rating in a research note on Thursday.

Netflix has a few advantages going for it, the Evercore team noted, including a burgeoning live events business and continued customer satisfaction.

Netflix announced earlier this month that it will again host two NFL games on Christmas. Last year's Christmas matchups drew in an average of 26.5 million viewers in the U.S., making them the most streamed NFL games in U.S. history, the company said. Other events have brought in even larger crowds, with 60 million households tuning into the November 2024 boxing showdown between influencer-turned-boxer Jake Paul and former world heavyweight champion Mike Tyson.

In a May survey by Evercore of 1,300 U.S. Netflix subscribers, 53% of respondents reported watching live events on Netflix, up from 47% a year prior. Perhaps more importantly, half of U.S. respondents said they would be more likely to stick with their subscription if Netflix provides more live content.

The attraction of the company's live events gives it a platform to bundle offerings and raise prices, Evercore analysts said.

"Remember how much you paid for your cable bundle?" the analysts asked. "We don't either, but we guarantee it was a lot more than the $24.99 Netflix currently offers for its Premium Plan."

The streaming giant also holds an edge among more price-sensitive consumers, though reported price sensitivity has ticked up recently in Evercore's U.S. surveys. Customer satisfaction plays a key role there. Forty-two percent of U.S. respondents ranked Netflix best among streaming competitors in content quality. Satisfaction was even higher among the 1,300 UK subscribers surveyed, with two-thirds of those respondents giving Netflix the top spot.

Even if customers want to move on from Netflix's higher-priced offerings, the company's ad-supported subscription, priced at $7.99 per month, will entice some to stick around. The return of popular series like "Stranger Things," "Squid Games," and "Wednesday" over the next several months could also reduce customer churn, Evercore's team said.

"In the event of a recession, Netflix's $7.99 ad-supported offering might be the single greatest entertainment value in the land," the Evercore analysts wrote.

Going forward, the question isn't whether Netflix is the dominant player in streaming -- that much is all but settled -- but whether the company's strength is already priced into its stock. Shares trade at about 43 times forecasted earnings for the next twelve months, more than double the ratio of the broader S&P 500.

Earlier this month, J.P. Morgan analyst Doug Anmuth downgraded the company to Neutral from Overweight, due in part to the stock's already-meteoric rise.

"To be clear, there's no change to our long-term bullish view on NFLX's streaming leadership position & the company's potential to effectively become global TV over time," Anmuth wrote in a research note. "However, more near-term, following significant stock price appreciation & outperformance, we believe the risk/reward in NFLX shares is becoming more balanced."

Others on Wall Street have fallen closer to Evercore's analysis. On Friday, analysts at Bank of America reiterated a Buy rating for the stock and hiked their price target to $1,490 from $1,175 -- the highest target among analysts surveyed by FactSet.

It's now down to investors to decide whether Netflix's yearslong bull run will continue.

Write to Nate Wolf at nate.wolf@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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May 30, 2025 12:32 ET (16:32 GMT)

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