Goldman Sachs upgrades Netflix to Buy, lifts 12-month target to $120
Goldman Sachs upgraded Netflix from Neutral to Buy and raised its 12-month price target to $120 from $100 after the streamer paid itself a $2.8 billion termination fee for the Warner Bros. bid. The firm forecasts advertising revenue rising from $1.5 billion in 2025 to $4.5 billion by 2027.
1. Upgrade Details
Goldman Sachs upgraded Netflix from Neutral to Buy, lifting its 12-month price target to $120 from $100. The firm cited improved risk-reward following the streamer’s $2.8 billion merger termination fee and stabilization of its standalone growth outlook.
2. Rationale for Upgrade
Analysts emphasized a standalone execution story after Netflix’s abandonment of the Warner Bros. bid. They highlighted three pillars: sustained double-digit revenue growth via subscriber additions and price hikes, margin expansion through moderating content spend, and an accelerating advertising business.
3. Financial Projections
Goldman projects advertising revenue to climb from $1.5 billion in 2025 to $4.5 billion by 2027 and $9.5 billion by 2030. The recent U.S. subscription price increase across three tiers is expected to contribute roughly $3 billion in incremental revenue over 2026 and 2027.
4. Valuation and Capital Returns
On valuation, Netflix trades at a PEG ratio around 1.1 times, below its five-year average of 1.65 times, presenting an entry point. The firm also anticipates free cash flow of $11 billion in 2026 and suggests potential share repurchases equating to 20–25% of current market cap over five years.