Written by Sinad Karahimetovic
Shares of Netflix (NASDAQ 🙂 rose more than 1% in premarket trading Monday after an Oppenheimer analyst upgraded to Outperform with a share price target of $325.
The upgrade move comes after Oppenheimer analysts conducted in-depth research into the company’s advertising opportunity, along with the results of a private consumer survey.
“Although the ad tier will attract some newbies, there is a greater chance of re-attracting floundering subscribers. Of the 15% inflated US subscriptions, 43% will re-subscribe at a lower rate. Of the 9% who have never signed up, 30% will do so at a lower price. Less The analyst said in a client note that roughly 70% of existing basic subscriptions will be downgraded to ad level versus 55% standard and 46% premium.
The company is seen as being “uniquely positioned to bring together large audiences and control the timing of chain releases for top-tier advertisers, resulting in a high CPM.”
The analyst believes that Street’s estimate is conservative and does not reflect the full advertising opportunity.
“The Street has not yet considered the opportunity to announce, and we believe sentiment should improve as more analysts update the models. We expect net subscriber additions of 15m/21m/19m vs. Streets forecast of 11m/13m/19m At ’23E/24E/25E, respectively’, the analyst concluded.