KeyBanc lowers Netflix stock price target on engagement concerns

KeyBanc lowers Netflix stock price target on engagement concerns

Gold slides as U.S.-Iran conflict lifts oil, hawkish Fed bets grow Investing.com - KeyBanc cut its price target on Netflix Inc. shares (NASDAQ:NFLX) to $92 from $115 while maintaining an Overweight rating on Monday. The stock currently trades at $73.37, near its 52-week low of $70.86, down 22% year-to-date. The firm said concerns around engagement have raised questions about long-term growth and driven price-to-earnings multiple compression.

The analyst noted the current situation reminds the firm of challenges Netflix faced in 2022. KeyBanc said Netflix addressed its 2022 challenges with an advertising tier and paid sharing initiatives. The firm believes new levers will likely center around content and product diversification, including partnerships similar to TF1 and live events.

The firm said these initiatives could aid perceived content quality and support better monetization per hour. KeyBanc expects the changes to help address current engagement concerns. The lowered price target reflects a more conservative multiple of 20 times 2028 estimated price-to-earnings and more modest earnings per share growth expectations, the firm said.

Netflix currently trades at a P/E ratio of 23.81, and InvestingPro analysis suggests the stock is undervalued at current levels. The platform offers 14 additional ProTips for NFLX, including insights on the company’s "GREAT" financial health score. In other recent news, Netflix Inc. is preparing to release its second-quarter 2026 earnings report on July 16 after market close.

Analysts from Benchmark have maintained a Hold rating on the stock, noting potential weakness in engagement following recent price increases. Meanwhile, Citizens has reiterated a Market Perform rating, expressing concerns about Netflix’s engagement and growth prospects but recognizing its structural advantages in scale and distribution. Additionally, Netflix is competing for U.S. broadcast rights to the 2030 and 2034 World Cup tournaments, with Citizens highlighting a potential $2 billion package for each event.

Bernstein SocGen Group has reiterated an Outperform rating for Netflix, pointing out that the World Cup has impacted second-quarter engagement and subscriber growth. Options data from Bloomberg suggests that Netflix shares may experience a 7.3% move following the earnings report. These developments reflect ongoing strategic and financial challenges and opportunities for Netflix in the current market landscape.

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