By Angela Palumbo

Netflix stock has underperformed the broader stock market in recent weeks, providing a perfect opportunity to buy ahead of its earnings, Wolfe Research says.

"Amid concerns of AI's possible impact on streaming economics and after very sharp 3Q underperformance, we are buyers of NFLX," analyst Peter Supino wrote in a research note.

Supino rates the streaming company at Outperform with a target of $1,390 for the price. That implies a 17% increase from the stock's closing price of $1,191.06 on Tuesday.

Netflix stock is up 36% this year, compared with the 15% rise of the S&P 500. Strong financial results and excitement over potential growth as the streaming platform focuses on increasing advertising revenue, live events, and original content, have made investors more positive.

Confidence has been shaken in recent weeks, though. The stock has dropped 9.6% from its record closing high of $1,339.13 on June 30, while the S&P 500 has gained 8.8%. Concerns have emerged regarding increased competition, specifically short-form videos, given that TikTok continues to operate and OpenAI has launched an app for AI-based short-form videos.

A potential merger between Paramount Skydance and Warner Bros. Discovery could mean more intense competition if the companies combine their content and bundle their services. That could make the merged business more attractive for both consumers and advertisers.

Still, Supino said, he is confident Netflix will be able to handle the challenge. "Netflix's widening growth strategies, superior scale, and rich cash flow position it to extend its lead in long-form video streaming, which continues to take wallet share from pay-TV," he wrote.

Shares of Netflix were up 1.8% to $1,212.67 in afternoon trading.

Other analysts have also issued optimistic commentary this week. Seaport Research Partners analyst David Joyce upgraded shares of Netflix to Buy from Neutral on Monday, raising his target for the price to $1,385 from $1,230.

"Engagement continues to be strong, with at least a couple of 'cultural zeitgeist' titles driving viewership share, and possibly subscriber net addition gains," Joyce wrote. He suggested buying the stock ahead of the company's third-quarter earnings report, expected after the stock market closes on Oct. 21.

Write to Angela Palumbo at angela.palumbo@dowjones.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.

(END) Dow Jones Newswires

October 08, 2025 15:46 ET (19:46 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.