Summary
Freedom Capital Markets upgraded Netflix stock to Buy from Hold while simultaneously reducing its price target to $104.00 from $1,070.00 on Tuesday. The decision follows a strong Q4 FY2025 reporting period, but tempered management guidance for Q1 and FY2026 and anticipated acquisition-related costs factored into the firm’s revised valuation.
Rating change and current trading
Freedom Capital Markets increased its recommendation on Netflix (NASDAQ:NFLX) even as it significantly lowered the target price. At the time of the update, Netflix shares were trading at $84.53, slightly above the company’s 52-week low of $81.93.
Performance that prompted the reassessment
The upgrade was prompted by Netflix’s Q4 FY2025 results, which outperformed market expectations across the principal metrics. The company reported robust growth in both paid subscribers and its advertising business. During the quarter, Netflix reached 325 million paid subscribers and delivered revenue growth of 15.85% over the trailing twelve months.
Forward guidance and cost outlook
Despite the encouraging quarterly performance, Netflix management provided more cautious guidance for Q1 and the full FY2026 than analysts had expected. Freedom Capital Markets also flagged expectations for elevated operating costs associated with Netflix’s proposed acquisition of Warner Bros. Those elements drove the firm to adopt a moderately negative stance on certain aspects of the results, which in turn contributed to the reduction in the price target.
Valuation implication
The newly stated $104 price target corresponds to an implied next-twelve-months price-to-earnings multiple of 35x, according to Freedom Capital Markets’ calculation. The firm noted that a pronounced share-price correction after Netflix’s prior earnings release was a factor in the decision to raise the rating even as the target was cut.
Analyst ranges and research access
Based on InvestingPro’s Fair Value assessment referenced by the firm, Netflix appears modestly undervalued at current price levels. Analyst price targets cited in that assessment span a range from $79 to $151.40. Investors interested in more detailed coverage can consult the Netflix Pro Research Report, one of 1,400-plus company reports available to subscribers.
Regulatory and acquisition scrutiny
Separately, Netflix is encountering regulatory scrutiny related to its proposed roughly $83 billion bid for Warner Bros Discovery. In the U.K., politicians and former policymakers have urged the national competition authority to conduct a full review of the transaction, citing concerns about Netflix’s market position in the TV streaming sector. In the U.S., Federal Communications Commission Chairman Brendan Carr has voiced worries about competition implications tied to the potential scale and consolidation that could result from the deal.
Company and market reaction to the bid
Netflix co-chief executive Greg Peters stated that the company was on track to secure shareholder approval for its approximately $82.7 billion offer and said there was limited appetite for a rival proposal from Paramount. Nonetheless, market participants have reacted with caution: the stock experienced a selloff amid the combination of conservative guidance and uncertainty surrounding the acquisition.
Other broker activity
In related analyst moves, Phillip Securities upgraded its Netflix recommendation from Sell to Accumulate and raised its price target to $100.00, citing Netflix’s leadership in video-on-demand and expressing confidence in its fiscal year 2026 estimates.
Conclusion
Freedom Capital Markets’ decision to upgrade Netflix’s rating to Buy while dramatically lowering the price target reflects a nuanced view: strong near-term operational performance counterbalanced by cautious guidance and anticipated acquisition-driven costs. The combination of analyst target dispersion, regulatory scrutiny of the Warner Bros bid, and recent share weakness leaves multiple uncertainties for investors to monitor.