Major Bank Ratings | China Merchants Securities International: Lowers Netflix Target Price to $126, Maintains "Outperform" Rating

Glonghui, January 22｜China Merchants Securities International released a research report stating that Netflix's quarterly results exceeded expectations, with revenue reaching $12 billion, an 18% year-on-year increase (compared to 17% in the third quarter), in line with expectations. The growth was mainly driven by the launch of blockbuster content such as the final season of "Stranger Things." Although the guidance for Q1 2026 and full-year revenue met market expectations, the profit margin guidance fell short, causing the stock price to retreat in after-hours trading. Looking ahead to 2026, China Merchants Securities International remains optimistic about the company's prospects, expecting that content-driven subscriber growth, increased pricing power, advertising business advancement, and operating profit margin expansion during continuous business scaling will provide sustained growth momentum. The firm maintains its "overweight" rating on Netflix, but lowers its target price from $142 to $126. Despite the uncertainty surrounding the Warner Bros. Discovery merger not being completely resolved, it is not expected to have a substantial impact on 2026 performance; with the significant valuation correction, the current stock price level is considered attractive.