Jefferies Sees Netflix Pricing and Ads Supporting Revenue Growth

Jefferies maintained its Buy rating on Netflix and an $85 price target, pointing to pricing and advertising as supports for revenue growth ahead of the streaming company's third-quarter report.

The firm said Netflix has room to increase monetization, expand margins and repurchase shares, which it sees as potential supports for sustained earnings growth.

Netflix forecast third-quarter revenue of $12.86 billion, up 11.7% from a year earlier. The company also projected $4.268 billion in operating income and a 33.2% margin for the quarter. Its full-year 2026 advertising revenue forecast is about $3 billion, roughly double the prior-year level. Details of the third-quarter earnings forecast were published earlier.

The revenue forecast is $300 million above Netflix's second-quarter revenue of $12.56 billion, while the projected operating margin is 0.2 percentage point lower than the second quarter's 33.4%.

Netflix is scheduled to release results Tuesday, Oct. 20.