Goldman Sachs Group, Inc.: Netflix (NFLX.US) sees positive revenue growth and return prospects, raising the target price to $120.

After breaking free from the struggle for control of Warner Bros (WBD.US) with Paramount Sky (PSKY.US), Netflix (NFLX.US) can now focus on its "strategic roadmap," which includes capital allocation to content, more live events, and returning capital to shareholders. As a result, with a more positive risk/reward outlook and considering Netflix's content lineup, Goldman Sachs Group, Inc. has upgraded the stock rating from "Neutral" to "Buy" and raised the target price by 20% to $120. Goldman Sachs Group, Inc. analyst Eric Sheridan believes that with the growth of the advertising business (expected to reach approximately $9.5 billion by 2030) and subscription price increases, Netflix should be able to achieve double-digit revenue growth over the next three to four years. Sheridan also predicts that Netflix's annual GAAP operating margin will increase by 250 basis points over the next three years, thanks to cost control, including "moderate" spending on content. Lastly, with the conclusion of the Warner Bros acquisition, Netflix can now start returning capital to shareholders, with an expected return of 20% to 25% of its market value to investors over the next five years. Sheridan's views align with those of most Wall Street and Seeking Alpha analysts, who believe that Netflix is in a strong position. Netflix will announce its first-quarter earnings after the close of the US stock market on April 16, with an expected non-GAAP earnings per share of $0.77 and revenue of $12.17 billion.