Netflix (NFLX) Stock: Ad Revenue Set to Double as Analysts See Major Upside

TLDR

• Netflix (NFLX) shares fell 22.66% in three months despite Q4 earnings beat, with revenue up 17.6% to $12.05 billion and EPS rising 30.2% to $0.56.
• Wedbush Securities predicts ad revenue will double from $1.5 billion to $3 billion in 2026, calling the selloff an overreaction to inflated expectations.
• Phillip Securities upgraded Netflix from “Sell” to “Accumulate” with a $100 target, citing streaming leadership and pricing power.
• Wall Street consensus shows “Moderate Buy” rating with average price target of $115.43, implying 34% upside potential.
• Company forecasts 2026 revenue of $50.7-$51.7 billion with analysts projecting 23.72% EPS growth to $3.13.

Netflix stock has been on a rough ride. Shares dropped 22.66% over the past three months. The decline continued even after the company reported better-than-expected Q4 results.

Netflix, Inc., NFLX

Investors are worried about rising expenses. Management guided for faster cost growth this year versus last year. That’s raising questions about profit margins in the near term.

But some analysts think the market is overreacting. Wedbush Securities believes investors have simply set unrealistic standards. The bar for Netflix has become so high that anything less than perfect looks like failure.

The actual Q4 numbers were strong. Revenue climbed 17.6% year-over-year to $12.05 billion, beating the $11.97 billion estimate. Operating income jumped 30.1% to around $3 billion. Net income increased 29.4% to $2.4 billion. EPS grew 30.2% to $0.56, topping the $0.55 consensus.

Advertising Growth Accelerates

Netflix generated over $1.5 billion in ad revenue during 2025. That’s more than 2.5 times the previous year’s total.

Wedbush expects this figure to hit at least $3 billion in 2026. The firm sees continued growth through 2027 and beyond. The pending Warner Bros. Discovery deal could add more momentum if it closes successfully.

Management confirmed advertising revenue should roughly double from 2025 levels. The ad-supported tier has quickly become a key growth driver.

Free cash flow reached $1.9 billion in Q4, up 35.8% year-over-year. Users streamed 96 billion hours of content in the second half of 2025, a 2% increase from the prior year.

Analyst Upgrades and Price Targets

Phillip Securities recently upgraded Netflix from “Sell” to “Accumulate.” The firm raised its price target to $100. They highlighted Netflix’s dominant position in streaming and ability to raise prices.

The upgrade came as Phillip Securities rolled over valuations to fiscal 2026 estimates. They acknowledged potential volatility around the Warner Bros. deal but expressed confidence in Netflix’s long-term positioning.

Wedbush maintains an “Outperform” rating with a $115 price target. The firm argues the selloff stems from inflated expectations rather than deteriorating fundamentals.

Wall Street assigns a “Moderate Buy” consensus. Of 44 analysts covering the stock, 25 rate it “Strong Buy,” three say “Moderate Buy,” 14 recommend “Hold,” and two maintain “Strong Sell.”

Valuation and Outlook

The average analyst price target stands at $115.43, suggesting 34% upside. The highest target of $150 implies potential gains of 74.2%.

Netflix trades at 26.62 times forward earnings. That’s above industry peers but below its own five-year average. The company serves approximately 325 million paid subscribers globally with a market cap near $364.9 billion.

For 2026, Netflix projects revenue between $50.7 billion and $51.7 billion, representing 12-14% growth. Analysts forecast Q1 fiscal 2026 EPS of $0.76, up 15.2% year-over-year. Full-year fiscal 2026 earnings are expected to grow 23.72% to $3.13 per share. Fiscal 2027 EPS is projected at $3.77, a 20.45% increase.

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