Q3 performance steady, growth ace in hand, Netflix (NFLX.US) rated higher by Guggenheim to $1450.

Guggenheim released a research report, maintaining a "buy" rating on Netflix (NFLX.US) with a target price of $1450. The report pointed out that Netflix made "steady progress" in the third quarter, and the bank believes that this streaming giant currently holds multiple growth cards in hand, poised for continued expansion in the future. The analyst team led by Michael Morris stated in the report that Netflix's third-quarter performance met market expectations, with fourth-quarter revenue outlook slightly exceeding previous guidance. Revenue growth in the third quarter was driven by member growth, price adjustments, and accelerated advertising revenue, with the advertising business achieving its best sales record in the third quarter, expected to double revenue by 2025. In addition, the management emphasized a focus on organic growth, maintaining a cautious attitude towards merger and acquisition opportunities, and clearly stating no intention to acquire traditional media assets. In terms of user engagement, Netflix's quarterly viewing share in the U.S. market reached a historical high, with total viewing time in the third quarter slightly higher than the first half of the year. The company expects to continue to maintain user engagement growth momentum in the fourth quarter with content such as "Stranger Things," season three of "The Crown," and season two of "Mismatched." Additionally, Netflix is expanding growth pathways through various collaborations, including developing IP merchandise with Mattel, Inc. (MAT.US) and Hasbro, Inc. (HAS.US), collaborating with Spotify (SPOT.US) to launch podcast content, and planning to introduce interactive advertising features and expand programmatic advertising in the fourth quarter, with Amazon.com, Inc. (AMZN.US) set to go live globally through its demand-side platform (DSP) starting in the fourth quarter. Netflix's core operating profit margin in the third quarter was 33.6%, higher than the company's guidance of 31.5%, but the reported operating profit margin declined due to a one-time tax impact in Brazil. Looking ahead to 2026, Guggenheim expects Netflix to drive incremental growth through expansion in advertising business, video game development, IP ecosystem construction, podcast and live content collaborations, among other directions. In terms of valuation, the Bank's target price of $1450 for Netflix is based on a 42.5 times estimated price-to-earnings ratio for 2026, representing a premium of about 70% over the entire technology sector and reflecting confidence in its leading position in the streaming industry and long-term value creation capability.