Netflix’s $7.99 Plan Could Be Company’s Key Strength In Recession, Says Evercore ISI

The firm raised its price target on Netflix to $1,350 from $1,150 and kept an ‘Outperform’ rating.

Netflix (NFLX) shares rose 0.4% in pre-market trade Friday after Evercore ISI raised its price target, calling the company’s membership plans a possible saving grace in the event of a recession.

The brokerage raised its price target on Netflix to $1,350 from $1,150, with an ‘Outperform’ rating, after conducting survey work in the U.S. and the U.K. That implies a projected upside of roughly 14%. 

The brokerage described key Netflix metrics in the regions as mixed to positive, according to TheFly. 

Evercore pointed out that Netflix’s total addressable market currently stands at over $650 billion, excluding China and Russia, and the company only accounts for less than 10% of that share. 

It believes the streaming giant has an "extremely strong and growing value proposition" and an "excellent track record of innovation." 

The brokerage also pointed to improving operating margins and free cash flow, which are enabling share repurchases and could eventually support a dividend.

“In the event of a recession, Netflix’s $7.99 ad-supported plan could be the best entertainment value available,” the analyst wrote, calling it a standout option for cost-conscious consumers.

Citi raised its price target to $1,250 from $1,020 on Thursday but kept a ‘Neutral’ rating, cautioning that Netflix’s valuation may be stretched and calling it “unappealing at prevailing levels.”.

While the brokerage expects solid fundamentals to continue, it flagged the stock’s recent multiple expansion as “a bit too robust.”

In post-market hours on Thursday, there was an influx of users running into error code ‘E-100’ on the platform. According to DownDetector, at least 80,000 people in the U.S. reported video streaming issues.

Earlier this month, Netflix said it plans to expand into short-form video and generative AI to help retain mobile users. The effort includes testing vertical video feeds in its mobile app, a move aimed at competing with TikTok and Instagram Reels.

The streaming platform’s global fan event, TUDUM, is scheduled to air on Saturday. 

Netflix’s stock has gained 32% year to date and is up 83% over the past 12 months.

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