By early September, Netflix (NFLX) stock had lost more than a third of its value from a year earlier. That made investors start to worry about the company’s growth direction.
Evercore ISI looked at the same stock and saw an opportunity. Analyst Kutgun Maral raised his Netflix price target on Sept. 14 and kept his Outperform rating. He told investors the sell-off is a good opportunity to buy the stock.
NFLX shares rose after the call, and people started asking again if the streaming giant is actually cheaper than it looks, or if the market is pricing in problems Netflix’s management has not admitted to yet.
Evercore’s Kutgun Maral finds new reasons to back Netflix stock
Evercore ISI raised its price target on Netflix to $110 from $100 on Sept. 14, and kept its Outperform rating, according to Investing.com. NFLX shares are near $78, so that target implies roughly 41% gains.
Maral has covered media, cable and telecom stocks for over a decade. He started from Sterne Agee before moving to RBC Capital Markets, and now Evercore ISI, which makes his opinion valued on Wall Street. His call this time is based on fresh survey data.
Evercore’s 58th quarterly U.S. subscriber survey found Netflix’s household penetration climbed to 63%, which is a multi-year high, GuruFocus reported. Japan penetration hit a record 22%, and subscribers in both markets showed stronger intent to stay, even though U.S. customer satisfaction is still behind.
Live sports drove much of that improvement. The number of Netflix users who watched live sports increased to 60% in September from 42% in March, and 45% of new Japanese subscribers signed up because of Netflix’s World Baseball Classic promotion. Bill Ackman also changed his mind on the stock this summer.
How Netflix actually makes money, and why the business keeps improving
Netflix earns nearly all its revenue from monthly subscriptions. Those subscriptions are split between an ad-free tier and a cheaper ad-supported plan launched in 2022. That ad-supported plan is now one of the fastest-growing parts of the business.
The company’s second-quarter revenue reached $12.56 billion, up 13.37% year over year, and Netflix’s management targets a 31.5% operating margin this year, up from roughly 27% two years earlier.
“I believe that we are delivering one of the best entertainment values that has ever existed,” Co-CEO Greg Peters told investors on the second-quarter call. “Our ads plan at $8.99 in the United States, we think is an amazing entry point.”
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Advertising is expected to bring in about $3 billion this year, which is roughly double 2025’s total. Ad revenue carries higher margins than subscriptions, and is an effective growth driver for Netflix.
Buybacks add further support. Netflix’s board approved an additional $25 billion in share buyback authorization in April 2026, according to the company’s SEC filing.
CFO Spence Neumann told investors the company spent $4.7 billion of that in the second quarter alone. He called it “our largest quarter of share repurchase in our history,” and $27.1 billion still remained as of June 30, according to the earnings call transcript obtained by Yahoo Finance.
Where this bullish call could go wrong
Netflix’s third-quarter revenue guidance of $12.86 billion is below Wall Street’s estimate of roughly $13 billion, which some investors are cautious about.
U.S. customer satisfaction is another worry. Even though penetration and retention improved, Evercore’s survey flagged ongoing satisfaction concerns among American subscribers.
There is also competition. Disney (DIS) trades near $106 even as it pays for the expensive launch of its standalone ESPN streaming platform. Warner Bros. Discovery (WBD) is close to $28 and is managing heavy debt while trying to sell the company. Both are still bidding for the same sports rights as Netflix.
More Streaming Stocks:
- Disney’s new CEO announces his biggest bets
- YouTube TV just gave subscribers a reason to look elsewhere
- 3 billionaire investors just piled into the same media stock
Netflix, Amazon and YouTube also just formed the Streaming Access and Choice Alliance, a lobbying group that will push for looser rules on how streamers bid for live sports, Axios reported. The alliance shows how much the three companies value live sports, and it signals that regulators are watching the space more closely.
Jim Cramer had a more cautious take. He acknowledged that Netflix’s most recent quarter had disappointed, but he still told viewers on Mad Money, “This is not a broken company.”
What investors should watch before acting on this call
Netflix reports third-quarter results on Oct. 20, and that will be the first real test for Evercore’s call. Investors should watch whether ad revenue and margins keep growing at the rate the company’s management has promised.
Netflix is just climbing back from a steep drop, so anyone considering a position should think about the risks as well. Netflix’s odds of rising depend heavily on live sports events and advertising, and if either one slows down, shares could fall back to their recent lows.
To be on the safer side, investors can spread their purchases through dollar-cost averaging instead of buying all at once. You can also diversify your portfolio to cushion against a disappointing quarter or a broader pullback across tech and media stocks.
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