Needham gives Netflix a chunky PT hike and maintains ‘buy’

Needham gave a triple-digit price target hike to streaming giant Netflix (NASDAQ:NFLX), raised its earnings estimates for 2026, and maintained its bullish rating.

Under its investment thesis, analysts led by Laura Martin said the company’s global scale should maximize its revenue and content investment. Bundling with other services should lower NFLX’s churn rate, and advertising should accelerate its revenue growth and expand margins.

The research firm said they like NFLX for its stable content spending, which is at $17B-$18B. They noted that the company has said it will use its growing FCF to repurchase shares, which they believe puts a relative floor under its share price and mitigates risk.

Needham believes that trends in labor productivity are a lead indicator of share price performance and pointed out that NFLX’s annual labor costs are higher than its $17B of content spending each year.

“NFLX reported the 3rd highest FCF per FTE for FY24, at $494,416. The average FCF per FTE in FY24 for the big-cap companies we cover was approximately $300,000. By implication, NFLX was about 65% more productive than the average in FY24, based on FCF/FTE,” the research firm said on Friday.

For FY26, Needham expects the company to report revenue of $49.9B (up 12% y/y and 2% above previous estimate); adjusted EBITDA of $16.3B (up 15% y/y and 3% above previous estimate); and EPS-GAAP of $31.03 (up 21% y/y and 2% above previous estimate).

NFLX has a PT of $1,500, up from $1,126, implying an upside of 20%. Stock is up 40% so far this year, while the benchmark S&P index is up nearly 7%.