Netflix (NASDAQ: NFLX) stock just got a major thumbs up five days ahead of the upcoming earnings report, with Jefferies initiating coverage of the streaming platform with a “Buy” rating and a price target of $85.
The new price implies an upside of more than 20% from the stock’s last closing price of $70.57, and the capital firm says it sees opportunities for sustained earnings growth thanks to higher subscription prices, advertising expansion, and improving operating margins.
Analyst John Colantuoni projects that these growth drivers could deliver annual earnings-per-share growth of more than 14% over the next decade. Likewise, he expects per-member revenue to increase by roughly 6%, which is more than half of the projected annual revenue growth of 11% between 2026 and 2029.
Following the call, NFLX shares rose 0.62% in pre-market trading, which, combined with yesterday’s modest 0.16% uptick, pushed the price to exactly $71 in pre-market hours.
Ads and subscription prices will prop Netflix stock prices, Jefferies says
As Colantuoni noted, Netflix’s standard subscription currently costs 60% less than competing services in the U. S. per viewing hour. Looking ahead, he expects that gap to narrow to 50% by 2029, if annual prices can increase by around 7%.
Similarly, ads are expected to provide another significant growth engine. Colantuoni himself forecasts advertising revenue will rise by around 35% annually, supported by subscriber growth, increased advertising loads, stronger third-party demand, and new ad formats.
However, any valuation argument will rest on Netflix’s ability to translate its global subscriber base and growing advertising business into higher revenue and profitability.
Netflix earnings now in focus
Netflix is scheduled to report its third-quarter results on October 20. Overall, analyst views remain broadly constructive and are in line with those given by Jefferies, but some reflect caution about profitability.
For example, KeyBanc has lowered its Netflix price target to $85, citing foreign-exchange headwinds and more modest operating-margin expansion amid continued content investment. Still, the firm maintained its “Overweight” rating.
Overall, with Jefferies identifying substantial potential for higher monetization and sustained earnings growth, the market is likely to focus on subscriber trends, advertising revenue growth, pricing, and operating-margin expansion when Netflix releases its earnings report.
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