Netflix Scores Big: BMO Raises Price Target to $1,000 Amid Live Sports Push

Netflix (NFLX) has been on a roll lately, and analysts are taking notice. BMO Capital Markets analyst Brian J. Pitz has maintained his Buy rating on the stock and raised his target price to a whopping $1,000 from $825. This revised target implies a long 21% upside relative to Tuesday's close. So, what's driving this bullish stance on the streaming giant? Let's dive in.

First off, Netflix has been making waves with its live sports strategy. The company has been securing exclusive rights to high-profile events, such as the Jake Paul-Mike Tyson boxing match and two Christmas NFL games in 2024. These events have drawn significant viewership and attracted new subscribers to the platform. But that's not all – Netflix has also started airing WWE's Monday Night Raw wrestling show, which is expected to result in significant engagement improvement compared to Peacock. Pitz estimates a 2-3 times engagement improvement, which will likely lead to increased subscriber retention and potentially attract new subscribers.

Moreover, Netflix has secured the U.S. rights to the 2027 and 2031 FIFA Women's World Cup tournaments. Pitz expects this to usher in new subscribers to the platform's ad-supported tier, as the Women's World Cup is expected to be a hit and ensure attractive return on ad spend (ROAS) across multiple verticals. This move is part of Netflix's broader strategy to introduce an ad-supported plan, which is priced at $6.99 a month. The move to strong viewership numbers is likely to make Netflix even more attractive to advertisers, perhaps even lapping up a percentage of the estimated $3bn global advertising spend by the end of 2025.

However, the stock has faltered recently, falling 11% since December 24 on worries about its valuation. Shares are now trading at a premium 39 times forward earnings compared with its peers. Nevertheless, Jason Helfstein of Oppenheimer, another analyst who believes Netflix has the potential for a live events effort, also has a valuation concern and has cut the stock to a $1,040 price target.

Despite the recent dip, Netflix's live sports strategy is expected to drive subscriber growth and retention. With a strong lineup of exclusive events and a growing ad-supported tier, Netflix is poised for a comeback. So, if you're looking for a streaming stock with a sports twist, Netflix might just be the ticket. Just keep an eye on that valuation, folks.