Deutsche Bank upgraded Netflix to Buy from Hold in a note Tuesday, saying the stock’s lower valuation undervalues its growth outlook. The bank cut its price target to $95 from $100 after lowering its operating income and free cash flow estimates, but the target still implies 37% upside.
Valuation and the revised price target
Analyst Bryan Kraft said Netflix trades at 18 times Deutsche Bank’s 2027 earnings estimate, down from about 40 times forward earnings in June 2025, when the stock peaked.
“We never thought of ~40x as a reasonable multiple for Netflix given the company’s decelerating growth outlook,” Kraft wrote. “However, at 18x, we believe the current (still very healthy) growth outlook is being undervalued, leaving room for multiple expansion to the low-to-mid 20x range, on top of 23% EPS growth in 2027.”
International engagement and production
Kraft said investors are too focused on how much time U.S. viewers spend on the service. He argued this overlooks the larger opportunity and healthier engagement abroad, where time spent has risen year over year in each of the past four six-month periods.
The analyst also pointed to Netflix’s lead in international production. More than 60% of its content is now produced outside the U.S., which he believes will help the company keep its global lead.
Platform expansion and artificial intelligence
Kraft added that Netflix’s brand, scale and expertise position it to expand as a platform rather than remain a producer and programmer of its own shows.
He also sees artificial intelligence as “more friend than foe” for Netflix. As a technology-driven company since its founding, he believes it can apply AI to content production, personalization and advertising more effectively than rival streamers.
