Netflix gains; Deutsche Bank turns bullish on valuation

By Reuters News

** Netflix's NFLX.O shares up 2.1% at $70.70 on Tues after Deutsche Bank upgrades to 'buy' from 'hold', saying lower valuation undervalues growth outlook

** Broker trims PT by $5 to $95; that still implies ~37% upside to stock's last close

** DB analyst Bryan Kraft said the stock trades at 18x his 2027 EPS estimate vs about 40x forward EPS when it peaked in Jun 2025

** "We never thought of ~40x as a reasonable multiple for Netflix given the company’s decelerating growth outlook. However, at 18x, we believe the current (still very healthy) growth outlook is being undervalued, leaving room for multiple expansion to the low-to-mid 20x range, on top of 23% EPS growth in 2027," Kraft wrote in a note

** Kraft said the market's "obsession" over US time spent on Netflix overlooks co's larger total addressable market and "healthier" international engagement trends, adding international time spent has increased yr/yr in each of the past four 6-month periods

** He also cited NFLX's competitive advantage in international production, saying >60% of its content is now produced outside the US, which he believes will help NFLX keep its global leadership position

** In addition, Kraft sees artificial intelligence as "more friend than foe" for NFLX. As a tech-driven firm since inception, it can leverage AI in multiple ways and more effectively than rival entertainment streamers, including by applying AI to content production, personalization, and advertising, he said

** With the move on the session, shares down ~25% YTD, including ~13% slide this month

** Avg rating of 51 analysts is "buy"; median PT of $94.50 down from $115 three months ago, per LSEG data

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