Netflix estimates too low as advertising scales, says Redburn Atlantic

Redburn Atlantic analyst Hamilton Faber says that with Netflix (NFLX) content spend growth outpacing incumbents, it sees volume growth as the principal growth engine in the near term, particularly internationally. Redburn’s advertising work suggests the company is currently selling meaningfully less than half of its inventory, implying “material upside” as its scale and relationships build, the analyst tells investors in a research note. The firm estimates advertising will rise from 4% of Netflix’s revenue in 2024 to 20% in 2028, and its view this as the principal driver of its above-consensus forecasts. Redburn’s earnings forecasts for Netflix over the next four years stand 1%, 4%, 9% and 15% ahead of consensus respectively. It believes consensus numbers are too low and keeps a Buy rating on the shares with a $1,145 price target