Netflix has regained a Buy rating from Citi, with analysts identifying three key factors that could support the stock’s performance over the next year.
The bank resumed coverage with a $115 price target, pointing to a potential upside of approximately 5% to 17%. This outlook is driven by expectations of improved profitability, strong pricing power, and increased returns to shareholders.
According to analyst Jason Bazinet, Citi sees three main reasons to be optimistic about Netflix. First, the company could raise its FY2026 EBIT guidance. Second, a price increase in the United States is anticipated in the fourth quarter of 2026. Third, Citi expects higher levels of share buybacks.
Citi also forecasts that Netflix’s operating margins for 2026 could come in around 40 basis points above market expectations. This projection reflects a more favourable cost structure and improved operational efficiency.
In addition, analysts believe that a potential price hike in the U.S. market later this year could further boost revenue growth.
Another supporting factor is the company’s limited appetite for large acquisitions. Citi suggests that this could allow Netflix to allocate more capital toward shareholder returns, particularly through share repurchase programs.
The bank highlighted that Netflix’s strong cash flow generation provides a solid foundation for increased shareholder distributions in the coming years.
However, Citi also pointed to risks surrounding long-term advertising revenue. While market consensus estimates suggest that ad revenue could reach around $11 billion by 2030, Citi expects a lower figure closer to $9 billion. The bank also projects slower annual growth in advertising revenue, at roughly $1.5 billion from 2027 onward, compared to the broader expectation of about $2 billion.
Despite these concerns, Citi remains positive on Netflix. After updating its financial model to reflect fourth-quarter 2025 results, higher revenue forecasts, and improved operating margins, the bank maintains a bullish outlook on the stock.
