Key Takeaways
- Rosenblatt reduced Netflix’s price objective from $96 to $95 while maintaining a Neutral stance
- Oppenheimer decreased its price objective from $135 to $120, retaining an Outperform designation
- First quarter revenue reached $12.25 billion, representing 16.2% annual growth and surpassing analyst expectations
- Second quarter 2026 projections disappointed investors; annual outlook remains intact
- Reed Hastings, company co-founder, will step down from his role as non-executive Chairman
Despite delivering impressive first-quarter results, Netflix faces analyst skepticism following conservative second-quarter revenue projections.
Rosenblatt Securities adjusted its price objective downward to $95 from $96, maintaining a Neutral stance on the streaming giant. The revision stems from a lowered adjusted EBITDA projection for 2026. The research firm applies a 24x enterprise value to EBITDA multiple based on its 2026 forecasts.
The firm anticipates Netflix will achieve a 24% compound annual growth rate for adjusted EBITDA between 2025 and 2027, accompanied by 15% revenue expansion during the same timeframe. Analysts characterize the company as a robust yet increasingly mature enterprise.
Oppenheimer delivered a more significant reduction, slashing its target from $135 to $120 while preserving its Outperform recommendation. The firm acknowledged overestimating the financial impact of recent domestic pricing adjustments.
Management projects second-quarter revenue expansion of 12% excluding currency fluctuations, or 14% on a two-year comparative basis. This represents a deceleration from Q1’s 15% growth rate. Oppenheimer’s valuation methodology applies a 30x multiple to its 2027 earnings per share projection.
First-quarter revenue totaled $12.25 billion, marking a 16.2% year-over-year advancement. The figure exceeded both Evercore ISI and consensus Wall Street projections of $12.18 billion.
Operating profit registered $3.96 billion with margins of 32.3%. While surpassing Evercore ISI’s forecast, the result trailed broader market expectations.
Advertising Business Gains Momentum
The ad-supported subscription tier continues its expansion trajectory. Advertising-tier memberships represented 60% of first-quarter subscriber additions. Oppenheimer identified the September non-programmatic advertising cycle timing and competitive pressure from Warner Bros. Discovery as headwinds impacting second-quarter revenue acceleration.
Analysts anticipate stronger performance during the latter half of 2026 contingent upon stable advertising market conditions and increased content availability.
International markets delivered encouraging results. EMEA territories posted 12% revenue growth, LATAM increased 18%, and APAC climbed 19% during the first quarter.
Wall Street Perspectives Diverge
Some analysts maintained their positions. UBS preserved its Buy recommendation and $130 price objective, emphasizing the company’s content spending strategy and live programming initiatives. The firm forecasts 14% UCAN revenue growth for Q2.
Needham similarly retained its Buy rating, highlighting innovative mobile offerings including vertical video formats and video podcasts as mechanisms to reduce subscriber attrition and enhance pricing flexibility.
Barclays lowered its target to $110 from $115 while keeping an Equalweight designation. Analysts expressed concern regarding management’s decision to maintain its existing guidance parameters.
William Blair reaffirmed its Outperform assessment, recognizing successful implementation of recent price increases across both advertising-supported and premium subscription tiers.
The streaming platform’s proprietary quality engagement indicator reached record levels during Q1, propelled by diverse content offerings including video podcasts and live programming.
Executives highlighted positive developments surrounding the World Baseball Classic and strengthening NFL partnership, though Oppenheimer doesn’t anticipate Netflix pursuing comprehensive sports season broadcasting rights.
Netflix verified that co-founder Reed Hastings will not seek reelection to his position as non-executive Chairman.
Full-year 2026 guidance remains unmodified. Oppenheimer’s annual revenue growth estimate of 13% year-over-year suggests subscription revenue advancement of 10%, incorporating $3 billion in advertising-generated revenue.
