Bernstein predicts Netflix could increase by 60% over the next two to three years
Bernstein has reaffirmed an outperform rating for Netflix, with a price target of $110. They noted that despite worries about high content expenditure, pressures on margins, and competition from short-form video platforms, Netflix still stands out as the top player in the streaming industry.
Even though the giant has faced challenges over the past year, analysts highlight the inherent strengths of Netflix’s core business model, branded “PxQxM.” There’s potential for growth in subscribers, price hikes, and their advertising segment, they believe.
The memo stated, “Netflix functions as a low-cost utility SVOD with limited reach in non-English speaking regions, demonstrating continued growth in operating leverage, even if at a slower rate than anticipated.”
The company’s stock price is down over 30% compared to last year, currently sitting at levels seen when it was aggressively pursuing profits.
Bernstein suggested that short-term investor fears might overshadow Netflix’s long-term earning capabilities. They estimated that Netflix’s 2026 EPS of $3.15 (excluding breakup fees from Warner Bros. Discovery) could rise to over $6 by 2030, and it’s currently priced at 22 times its expected 2027 EPS.
Further, they commented, “While this represents a significant opportunity, reaching a ‘trillion dollar club’ status within this timeframe seems unlikely, although it remains a somewhat arbitrary benchmark.”
Looking ahead, Netflix anticipates ad revenue reaching around $3 billion this year. Bernstein predicts that this could more than double by 2030, spiking from about $7.6 billion to $8.3 billion as the company broadens its ad inventory and audience.
If the growth in content spending slows to 6% by 2030, analysts believe this could favor high-end EPS outcomes, potentially reaching the mid-$6 range. They expect the stock could surge to at least $135 in the next couple of years, marking a potential 60% uptick from its current valuation.
UnitedHealth experiences its best day since April
UnitedHealth’s stock jumped 6%, representing its most significant single-day rise since April 21, when it nearly soared 7%.
This uptick brings its year-to-date increase to 21%.
CrowdStrike’s CEO notes a pivotal moment in cybersecurity
George Kurtz, CEO of CrowdStrike Holdings, indicated that the cybersecurity sector has reached a critical juncture, as AI advancements are both enhancing defenses and escalating threats.
During an earnings call, he referenced new AI models from Anthropic and OpenAI, capable of identifying software vulnerabilities at an unprecedented pace. Kurtz emphasized that this rapid development elevates the demand for specialized cybersecurity solutions, noting CrowdStrike’s involvement in early access programs for these advanced AI systems.
He added, “This dialogue has shifted towards the notion that AI could disrupt the security of organizations, warning that increasingly advanced AI tools could allow adversaries to ‘democratize destruction.’”
Although Wells Fargo analysts found CrowdStrike’s first-quarter results strong, they expressed concerns that it might not suffice to meet investor expectations, especially given a 64% rise in the stock the previous month compared to a 7% increase in the Nasdaq Composite Index. Yet, they believe the robust full-year outlook and management’s comments on an AI-driven turning point will help in preparing for future actions. The company has retained its Overweight rating and a $725 price target.
Dow bounces back, while S&P 500 dips
The broader market index slipped 0.4%, and the Nasdaq Composite Index fell 1%. Conversely, the Dow Jones Industrial Average rallied by 526 points (1.1%) across its 30 stocks.
Unemployment claims reach a four-month high
New jobless claims surged last week to their highest mark since early February, as reported by the Labor Department. First-time applications for the week ending May 30 totaled 225,000, rising 13,000 from the prior week and surpassing the Dow Jones consensus estimate of 215,000. This figure marked the highest level since February 7.
Additionally, productivity increased by 0.3% in the first quarter, falling short of the expected 0.5% increase, while unit labor costs rose by 1.8%, also below the anticipated 2.4% increase.
Wells Fargo describes a chaotic market atmosphere
Wells Fargo strategist Scott Wren noted that markets have been on a “roller coaster” since the onset of the U.S.-Iran conflict, suggesting that significant fluctuations aren’t likely to settle down soon.
Wren pointed out that the U.S. benchmark West Texas Intermediate has swung by 5% to 10% in both directions multiple times daily, and remarked that bond yields show no margin for error—citing movements ranging from 4% to 4.67% recently.
He predicted that mounting pressure on both the U.S. and Iran suggests the need for an agreement to resume energy flows globally. However, he also cautioned that inflation will remain a concern for the rest of the year.
CrowdStrike endures a significant slump
Investors reacted negatively to CrowdStrike’s second-quarter outlook, causing its stock to plummet 10% and dragging it down by 13.5%, marking its worst performance since July 2024.
Broadcom’s stock suffers its worst day in a year
Broadcom’s shares dropped over 12% following a disappointing quarterly report. If the decline persists, it would mark the stock’s worst performance since January 27, when it fell 17.4%.
Asia-Pacific markets decline amid Middle East tensions
Markets in the Asia-Pacific region fell on Thursday, mirroring losses on Wall Street, as rising tensions between Iran and the United States ignited concerns over energy and inflation. South Korea’s Kospi closed down 1.84% at 8,639.41, while the small-cap Kosdaq slightly increased by 2.31% as trading resumed after a holiday.
Japan’s Nikkei Stock Average decreased by 1.36% to 67,470.69, and the TOPIX fell by 1.11% to 3,951.85. Softbank Group’s stock also dropped over 10%, amidst broader declines in Asian tech stocks. Australia’s S&P/ASX 200 index fell by 1.88%, while mainland China’s CSI 300 index dipped by 0.69%.
In India, the BSE Sensex maintained a steady position, noting slight gains by 1:20 PM local time.
Renewed tensions in the Middle East impact Asian markets
Asian markets were lower at the Thursday opening, reflecting losses on Wall Street due to ongoing tensions between Iran and the U.S., which are causing oil prices to spike and raising energy and inflation worries. South Korea’s Kospi fell by 1.25%, while the small-cap Kosdaq increased by 3.83% after the holiday break. Japan’s Nikkei Stock Average dropped by 1.74%, and the TOPIX fell by 1.09%.
Australia’s S&P/ASX 200 index fell by 1.14%, with the CSI 300 dipping by 0.84% in mainland China.
Stocks showing significant after-hours movement
Among the stocks experiencing the most notable price changes in after-hours trading:
- Broadcom – Shares fell by 5% after reporting second-quarter revenues of $22.19 billion, which was below analyst expectations of $22.27 billion.
- CrowdStrike – Shares dropped by 9% due to underwhelming Q2 guidance.
- PVH – The parent company of Tommy Hilfiger and Calvin Klein saw a fall of over 20% after revising its profit outlook for the entire year.
Energy sector leads market gains
In Wednesday’s trading, energy stocks were the clear winners, rising by 1.38%, marking the best performance among the 11 GICS sectors. Following closely were consumer staples and healthcare, which showed increases of 0.77% and 0.69%, respectively. Meanwhile, technology stocks lagged, declining by 1.52%.
Dan Ives sees SpaceX IPO as pivotal
SpaceX set its IPO price at $135 per share, valuing the company over $1.75 trillion. Wedbush analyst Dan Ives described this as a “turning point.” He mentioned in a letter to clients that this IPO could serve as a significant test for public markets post a period of slow activity from SpaceX, potentially setting the stage for AI giants like Anthropic and OpenAI to follow suit.
He noted that the proceeds are likely aimed at multiple business initiatives, such as enhancing AI computing resources and expanding the Starlink satellite network, while also investing in emerging technologies, including solar-powered data centers in space.
S&P 500 futures decline on Wednesday night
S&P 500 futures dipped on Wednesday evening; by 6 PM ET, they were down 0.4%. Nasdaq 100 futures decreased by 0.6%, while Dow futures traded slightly up.
