Deutsche Bank upgraded Netflix stock to Buy from Hold on Tuesday, arguing that the company’s current valuation does not fully reflect its growth potential.
The bank lowered its price target to $95 from $100 after reducing its estimates for operating income and free cash flow. However, the revised target still suggests roughly 37% upside from current levels.
Netflix Valuation Has Fallen Sharply
Analyst Bryan Kraft noted that Netflix now trades at around 18 times Deutsche Bank’s 2027 earnings estimate.
That represents a significant decline from roughly 40 times forward earnings in June 2025, when Netflix shares reached a peak.
Kraft said the earlier valuation appeared difficult to justify because Netflix’s growth rate was slowing. At the current valuation, however, he believes the market may be underestimating the company’s still-strong growth outlook.
Deutsche Bank expects Netflix earnings per share to grow by about 23% in 2027. The firm also sees room for the valuation multiple to expand into the low-to-mid 20s.
International Engagement Supports Netflix Growth
Kraft also argued that investors may be placing too much emphasis on the amount of time US viewers spend on Netflix.
According to the analyst, this focus overlooks stronger engagement trends in international markets.
Viewer time outside the United States has increased year over year during each of the past four six-month periods, highlighting continued strength in Netflix’s global audience.
Global Content Strategy Remains a Key Advantage
Netflix’s international production capabilities could provide another important competitive advantage.
More than 60% of the company’s content is now produced outside the United States. Kraft believes this global production network could help Netflix maintain its leadership position across international streaming markets.
The company’s scale, brand recognition and production expertise could also support its evolution into a broader entertainment platform rather than simply a producer and distributor of original programming.
Artificial Intelligence Could Benefit Netflix
Deutsche Bank also views artificial intelligence as a potential opportunity rather than a major threat to Netflix.
Kraft described AI as more of a positive force for the company, given Netflix’s long history as a technology-driven business.
He believes Netflix could use AI across several areas, including content production, personalized recommendations and advertising.
These capabilities may allow the company to use artificial intelligence more effectively than some competing streaming platforms, potentially strengthening its long-term position in the industry.
