Bernstein has reaffirmed its outperform rating on Netflix (NFLX) with a price target of $110. The analysis maintains that, despite market concerns over content spending pressures, margin headwinds, and competition from short-form video rivals, Netflix remains the streaming sector's most fundamentally sound investment.

Although the streaming giant has faced operational pressures over the past year, the firm's analysis focuses on the core business model of 'Price x User Scale x Margin (PxQxM)', identifying three significant growth levers for Netflix: user base expansion, subscription price increases, and the scaling of its advertising business.

The report states: 'Netflix is a cost-effective, essential subscription video-on-demand (SVOD) service with relatively low penetration in non-English speaking markets; the company's operating leverage continues to improve, albeit at a slower pace than previously anticipated.'

Over the past year, Netflix's stock price has declined by more than 30%, bringing its current valuation back to levels seen during the period when it was in talks to acquire Warner Bros. Discovery.

However, Bernstein argues that the market is overly focused on short-term negatives, overlooking the company's long-term earnings potential. Excluding one-time separation fees related to Warner, the consensus estimate for Netflix's 2026 earnings per share (EPS) is $3.15, with EPS potentially doubling to above $6 by 2030. The stock currently trades at only about 22 times estimated 2027 EPS.

The report notes: 'The medium-to-long term investment value is clear, but the probability of joining the trillion-dollar market capitalization club in the short cycle is low; the trillion-dollar mark is merely a reference milestone.'

Netflix itself projects advertising revenue of approximately $3 billion for this year. As its ad-supported, lower-priced membership tier rolls out to more countries and its advertising audience expands, Bernstein calculates that Netflix's ad revenue could more than double by 2030, reaching a range of $7.6 billion to $8.3 billion.

Analysts added that if the growth rate of content spending moderates to 6% by 2030, the company's EPS could reach the upper end of the forecast range, stabilizing around $6.50.

Bernstein forecasts that Netflix's share price could reach at least $135 within the next two to three years, representing a potential gain of approximately 60% from current levels.