Netflix Upgraded to Accumulate on Content Strategy and Ad Growth February 3, 2026
Company Overview and Market Position
Netflix operates as a leading video-on-demand (VOD) streaming service, delivering entertainment content to subscribers globally. The company has established itself as the dominant player in the streaming industry, leveraging its extensive content library, original programming investments, and technological infrastructure to maintain competitive advantages. Netflix’s business model combines subscription revenues with an increasingly important advertising component, thus positioning it well in the evolving media landscape.
Strong Q4 Performance Exceeds Expectations
Netflix delivered solid fourth-quarter results that met analyst expectations while surpassing the company’s own guidance for both Q4 and full-year 2025. The streaming giant’s FY25 revenue and profit after tax and minority interests (PATMI) came in at 100% and 99% of estimates respectively, which demonstrates the company’s ability to execute on its financial projections.
Revenue Growth Accelerates Across Multiple Drivers
The company reported impressive revenue growth of 17% year-over-year, fuelled by several key factors. Membership growth contributed significantly with an 8% year-over-year increase, while strategic pricing adjustments and an improved plan mix further boosted revenues. Particularly noteworthy was the scaling of advertising revenue, which grew 2.5 times compared to the previous year, highlighting Netflix’s successful diversification into the ad-supported streaming model. Management projects continued momentum with 15% year-over-year growth expected for the first quarter of 2026.
Investment Recommendation and Outlook
Phillip Securities Research has upgraded Netflix to ACCUMULATE from SELL, raising the target price to US$100 from the previous US$95. This upgrade reflects the firm’s confidence in Netflix’s structural positioning and financial strength for long-term growth. The analysts maintain their FY26 forecasts, terminal growth assumptions, and weighted average cost of capital (WACC) calculations unchanged, indicating stability in their fundamental analysis.
The research highlights Netflix’s clear leadership in the Videa on Demand (VOD) space and strong pricing power as key investment merits. While potential volatility is expected due to the Warner Bros. deal, analysts believe Netflix’s strategic positioning and financial foundation make it well-equipped to navigate industry challenges and capitalise on growth opportunities.
Frequently Asked Questions
Q: What was Netflix’s revenue growth rate in the most recent quarter?
A: Netflix reported revenue growth of 17% year-over-year, driven by membership growth, pricing adjustments, improved plan mix, and scaling ad revenue.
Q: How did Netflix’s advertising revenue perform?
A: Netflix’s advertising revenue grew 2.5 times year-over-year, demonstrating significant scaling in this new revenue stream.
Q: What is Phillip Securities Research’s current recommendation and target price for Netflix?
A: Phillip Securities Research upgraded Netflix to ACCUMULATE from SELL with a target price of US$100, increased from the previous US$95.
Q: How did Netflix’s actual results compare to expectations?
A: Both Q4 and full-year results were in line with analyst expectations and exceeded Netflix’s own guidance. FY25 revenue and PATMI came in at 100% and 99% of estimates respectively.
Q: What membership growth did Netflix achieve?
A: Netflix reported membership growth of 8% year-over-year, contributing to the overall revenue increase.
Q: What are the key reasons behind the stock upgrade?
A: The upgrade is based on Netflix’s clear leadership in the VOD space, strong pricing power, and solid structural and financial positioning for long-term growth.
Q: What revenue growth does management project for the next quarter?
A: Netflix’s management has projected 15% year-over-year revenue growth for the first quarter of 2026.
Q: What potential risks does the research highlight?
A: The research house notes that volatility is expected due to the Warner Bros. deal, though analysts believe Netflix is well-positioned to handle this challenge.
This article has been auto-generated using PhillipGPT. It is based on a report by a Phillip Securities Research analyst.
Disclaimer
These commentaries are intended for general circulation and do not have regard to the specific investment objectives, financial situation and particular needs of any person. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of any person acting based on this information. You should seek advice from a financial adviser regarding the suitability of any investment product(s) mentioned herein, taking into account your specific investment objectives, financial situation or particular needs, before making a commitment to invest in such products.
Opinions expressed in these commentaries are subject to change without notice. Investments are subject to investment risks including the possible loss of the principal amount invested. The value of units in any fund and the income from them may fall as well as rise. Past performance figures as well as any projection or forecast used in these commentaries are not necessarily indicative of future or likely performance.
Phillip Securities Pte Ltd (PSPL), its directors, connected persons or employees may from time to time have an interest in the financial instruments mentioned in these commentaries.
The information contained in these commentaries has been obtained from public sources which PSPL has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively the “Research”) contained in these commentaries are based on such information and are expressions of belief only. PSPL has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete or verified or should be relied upon as such. Any such information or Research contained in these commentaries are subject to change, and PSPL shall not have any responsibility to maintain the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will PSPL be liable for any special, indirect, incidental or consequential damages which may be incurred from the use of the information or Research made available, even if it has been advised of the possibility of such damages. The companies and their employees mentioned in these commentaries cannot be held liable for any errors, inaccuracies and/or omissions howsoever caused. Any opinion or advice herein is made on a general basis and is subject to change without notice. The information provided in these commentaries may contain optimistic statements regarding future events or future financial performance of countries, markets or companies. You must make your own financial assessment of the relevance, accuracy and adequacy of the information provided in these commentaries.
Views and any strategies described in these commentaries may not be suitable for all investors. Opinions expressed herein may differ from the opinions expressed by other units of PSPL or its connected persons and associates. Any reference to or discussion of investment products or commodities in these commentaries is purely for illustrative purposes only and must not be construed as a recommendation, an offer or solicitation for the subscription, purchase or sale of the investment products or commodities mentioned.
This advertisement has not been reviewed by the Monetary Authority of Singapore.
About the author
Helena Wang
Helena covers Hardware/Marketplaces/ETF. Helena graduated with a master's degree in Financial Technology from Nanyang Technological University.
