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On September 14, Evercore ISI raised its price target for Netflix, Inc. (NASDAQ:NFLX) from $100 to $110 while maintaining its Outperform rating. The research firm rolled its valuation framework forward to 2028 and applied a multiple of 25 times its 2028 EPS estimate.
The new price target represents more than 40% upside from the share price of $76.41 as of September 16. However, the stock has declined about 16% year-to-date and remains well below its 52-week high of $124.86.
Evercore ISI conducted its 58th quarterly US survey and 12th semi-annual Japan survey on Netflix, Inc. (NASDAQ:NFLX), which showed multi-year high penetration of 63% in the US and a record-high 22% penetration in Japan.
Japan also showed strong subscriber engagement as 58% of subscribers said they were slightly or not at all likely to cancel. Subscriber satisfaction in Japan also reached 67%.
The company's new ads plan also showed encouraging signs in Japan. About 66% of new ads plan subscribers were either former Netflix users or people who were new to Netflix.
The ads plan is also helping Netflix, Inc. (NASDAQ:NFLX) in the US, where 35% of subscribers considering cancellation said they would switch to the ads plan instead of cancelling. The Standard with Ads offering continues to support gross subscriber additions while also helping reduce cancellations in both the US and Japan.
Parnassus Investments also discussed Netflix, Inc. (NASDAQ:NFLX) in its "Parnassus Growth Equity Fund" second-quarter 2026 investor letter. The investment management company noted that "Netflix, Inc. (NASDAQ:NFLX) reported solid first-quarter results, but company management did not raise revenue guidance for the full year, disappointing some investors. Cofounder Reed Hastings announced plans to step down from the board, which may have further weighed on shares."
The company also continues to face competition from free services and other streaming platforms, which could make it harder for the company to grow its share of TV time.
Hedge fund interest in the stock has also weakened. According to Insider Monkey's database, 121 hedge fund portfolios held Netflix, Inc. (NASDAQ:NFLX) at the end of the second quarter, down from 144 in the first quarter.
Short interest, however, remains relatively low. As of August 31, short interest stood at 2.21% of the company's float, indicating a relatively limited bearish positioning in the stock.
Analyst sentiment remains largely positive. As of September 16, 69% of the 54 analysts covering Netflix, Inc. (NASDAQ:NFLX) had a Buy rating on the stock. The median 12-month price target of $93.50 also points to about 22.37% potential upside.
Overall, Netflix, Inc. (NASDAQ:NFLX) has a mix of positive and negative signals. Strong Evercore ISI survey results, growing penetration, and the retention benefits of the ads plan support the bull case. However, the stock's year-to-date decline and reduced hedge fund ownership highlight some of the concerns weighing on investor sentiment.
While we acknowledge the potential of NFLX as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
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