After Abandoning Bid for Warner Bros., Netflix (NFLX.US) Receives "Buy" Rating from Citigroup

Citic Securities Finance App has learned that after Netflix (NFLX.US) and Paramount Global (PSKY.US) competed for Warner Bros. (WBD.US) assets, Citigroup has upgraded its rating on the streaming giant Netflix to “Buy” with a target price of $115. The bank believes there are multiple catalysts that could drive Netflix’s stock price up by 5% to 17%, including the company’s upward revision of its full-year EBIT guidance, price hikes in the U.S. in the fourth quarter, and larger-scale stock buybacks.

Citigroup stated on Wednesday: “Many investors believe that during regulatory reviews related to mergers and acquisitions, Netflix is unlikely to raise prices. However, we now think Netflix has no reason not to raise prices — but does Netflix have pricing power? We believe they do.”

Citigroup also believes that Netflix’s large content budget has given it a scale advantage over competitors, which will provide the company with a competitive edge in the coming years.

The bank said: “We believe that to challenge Netflix’s competitive advantage, competitors must increase their content investments. But we think this is unlikely in the short term because Disney (DIS.US) and Peacock seem focused on profitability, and other competitors have high leverage.”

However, Citigroup currently sees the only risk for Netflix as a decline in advertising revenue expectations. The market generally expects Netflix’s advertising revenue to reach $11 billion by 2030, lower than the $12 billion projected in April 2025, and this figure could further decrease to around $9 billion.