Netflix's Scale Should Protect Its Dominance, Says Analyst

Core Insights - Netflix is experiencing competitive pressures due to industry consolidation, particularly following the Paramount Skydance merger and potential Warner Bros. Discovery acquisition [1] - Bank of America forecasts Netflix's Q3 2025 revenue at $11.53 billion and operating income at $3.63 billion, aligning with company guidance [1] Content Performance - Strong viewership for Netflix content includes 41.4 million viewers for Canelo–Crawford and 325 million views for KPop Demon Hunters, marking it as Netflix's most-watched film [2] Analyst Ratings and Price Forecast - Analyst Jessica Reif Ehrlich maintains a Buy rating with a price target of $1,490, indicating a 22% upside from the October 15 price of $1,219.03, driven by subscriber and earnings growth from advertising and live events [3] - Netflix shares have declined 4% since early September, underperforming the S&P 500's 2% gain amid competition and merger speculations [3] Competitive Landscape - The emergence of AI-driven platforms like OpenAI's Sora adds competitive pressure, but Bank of America believes Netflix's scale and technology-first approach will help maintain its streaming leadership [4] - Netflix plans to integrate with Amazon's DSP in Q4 to enhance ad-buying options, which is expected to boost ad demand and improve first-party data utilization [4] Long-Term Financial Projections - Bank of America projects Netflix's earnings per share to rise from $26.21 in 2025 to $40.26 in 2027, with revenue expected to grow from $45.10 billion in 2025 to $56.85 billion in 2027 [5] - The price forecast is based on approximately 39x 2026E EBITDA, with a DCF model assuming a 6.5% terminal growth rate and a 10.2% Weighted Average Cost of Capital [5]