Rosenblatt Cuts Netflix to Neutral and Slashes Target After Warner Bros. Deal

Core Viewpoint - Rosenblatt downgraded Netflix from Buy to Neutral and reduced its price target to $105 from $152 due to the uncertainty created by its acquisition of Warner Bros.' studios and HBO businesses [1][3] Group 1: Acquisition Details - Netflix announced an $83 billion enterprise-value agreement and a $72 billion equity-value deal for Warner Bros.' studios and HBO businesses, introducing significant strategic and execution risks [2] - The transaction is viewed as unlikely to yield justified financial returns on invested capital, with Netflix relying on broad, unspecified assumptions about leveraging Warner Bros.' content library [2] Group 2: Valuation and Rating Change - Due to heightened uncertainty, a more conservative valuation multiple of 25x enterprise value to 2026 estimated EBITDA was applied, resulting in a price target reduction of $47 to $105 [3] - The risk-reward profile no longer supports a bullish stance, leading to the downgrade from Buy to Neutral [3]