Netflix stock may be in for a rough quarter, but analysts say it's not a good idea

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Netflix stock may be in for a rough quarter, but analysts say it's not a good idea

Netflix Inc.'s biggest cliffhanger isn't a season-ending episode of Stranger Things or Money Heist, but it's closer to home: its financial metrics.

The company has started a plan to pump up sales by pulling an on-face plan and ad-supported plan.

In 2022, analysts such as Jefferies Andrew Uerkwitz took a sunnier position on a stock that lost half of its market value because of the changes. He upgraded Netflix shares to buy in a note Thursday about the prospect of video on demand, or AVOD, coupled with changes to password sharing, to drive top line outperformance in fiscal 2024. Uerkwitz predicts $40.4 billion in 2024 sales, a 7% rise over Wall Street estimates, and adjusted EBITDA earnings before interest, taxes, depreciation and amortization of $10.9 billion, versus Wall Street estimates of $8.6 billion.

He added that Netflix and Walt Disney Co.'s DIS, Disney are likely to capture most of the incremental TV ad spending despite a generally agreed-upon view that digital ads will taper off in 2023.

In a note Wednesday, John Blackledge said that Netflix is the best recession play in our coverage universe if macro conditions worsen. In a note, the price target is $405, or 24% above its closing price of $327.26 on Wednesday.

Christian said that Netflix is so data driven and into demographics that it raises the value on the ad side. Evercore ISI analyst Mark Mahaney wrote on Wednesday that Netflix, Uber Technologies Inc. UBER, and Booking Holdings Inc. BKNG are some of the best ideas for New Money Longs this year.

At least for the fourth quarter, not everyone is bullish on Netflix. The analyst warns that Netflix could be in for a very rough quarter.

According to FactSet, analysts expect Netflix to report $7.84 billion in revenue and adjusted earnings of 60 cents a share in the fourth quarter. In the same quarter a year ago, the company reported $7.71 billion in revenue and earnings of $607 million, or $1.33 a share.

The S&P 500 SPX is up 4% in the same period, while Netflix shares have climbed 12% so far this year.