Morgan Stanley cuts Netflix stock price target on engagement concerns

Morgan Stanley cuts Netflix stock price target on engagement concerns

US concludes third round of strikes against Iran after Trump reinstates blockade Investing.com - Morgan Stanley lowered its price target on Netflix Inc. stock to $90.00 from $115.00 while maintaining an Overweight rating on the shares. The stock currently trades at $73.83, hovering just above its 52-week low of $70.86, with earnings results due in two days. According to InvestingPro analysis, Netflix appears undervalued at current levels, with a PEG ratio of 0.5 suggesting the stock trades at an attractive valuation relative to its growth prospects.

The firm expects a largely inline second-quarter print and third-quarter guidance, along with a reiteration of the fiscal year 2026 guidance. Morgan Stanley said it is hopeful for a more robust buyback cadence. Credit card panel data suggests a slightly larger than usual spike in churn following price hikes, though survey work indicates continued long-term pricing power.

The firm believes engagement concerns are largely overblown and sees potential for the live events and sports slate in the second half to show improvement. Morgan Stanley noted that shares bottomed at approximately 15 times earnings in summer 2022 after subscriptions went negative for the first time in 10 years, which it views as a reasonable analog if engagement deteriorates further. The firm’s bear case stands at $60, representing approximately 20% downside or 15 times next-twelve-month earnings, while its bull case remains at $115.

For investors seeking deeper analysis, Netflix is among the 1,400+ US equities covered by comprehensive Pro Research Reports, which transform complex Wall Street data into clear, actionable intelligence. Netflix trades on NASDAQ:NFLX. In other recent news, Netflix Inc. is preparing to release its earnings report on July 16.

According to options data from Bloomberg, the report may prompt a 7.3% movement in Netflix’s stock. In anticipation of these results, Benchmark has maintained its Hold rating on the company, with analyst Daniel L. Kurnos pointing out potential engagement weaknesses following recent price hikes. Meanwhile, KeyBanc has lowered its price target for Netflix from $115 to $92, citing concerns about engagement and long-term growth.

Citizens continues to rate Netflix at Market Perform, as the company bids for U.S. broadcast rights for the 2030 and 2034 World Cup tournaments, which could cost $2 billion each. Citizens also reiterated its Market Perform rating due to worries about Netflix’s engagement and growth prospects. The firm acknowledged Netflix’s structural advantages but noted a lack of short-term catalysts to boost engagement or financial estimates.