Morgan Stanley analysts lowered their price target on Netflix (NASDAQ:NFLX) by $20, setting it at $430 per share, just ahead of the Q3 earnings report of the company, scheduled on Oct 18. Despite sustaining a “bullish” stance towards Netflix, recognizing its impressive global scale and lucrative returns, analysts express concerns regarding its valuation.

Plans by Netflix to limit password sharing and venture into the advertising space in early 2022 have seemingly set expectations that might be somewhat elevated beyond practicality, as noted by Morgan Stanley. From the latest analysis, Morgan Stanley identifies a few key points: there’s perceived risk related to net additions in 2024; they predict that over time, revenue, earnings, and free cash flow will impact NFLX equity more than net additions, but also foresee a potential risk of a lower multiple with lower net adds; and they perceive Netflix’s potential to license from major media studios again as a long-term positive.

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