Netflix is a buy as subscription price hikes drive gains, says Goldman Sachs
Netflix are poised to go higher after the company recently raised its subscription prices, according to Goldman Sachs. The investment firm upgraded the streaming giant to buy from neutral. It also hiked its price target on shares to $120 from $100, implying 21.6% upside from Thursday’s close. “We see NFLX focused on a strategic roadmap around allocating capital toward both a) continuing to lead the broader media industry in content acquisition & development (with an increasing mix allocated to live entertainment, creator/user economy content and gaming) and b) the scope for outsized multi-year capital returns to shareholders (including the ~$2.8b merger termination fee received from PSKY),” Goldman Sachs analyst Eric Sheridan said Sunday in a note to clients. In March, Netflix unveiled its first subscription plan increases since January 2025. The hike came as the company made moves to invest more heavily in live events, video podcasts and other novel content types, in addition to bolstering its existing TV and movie offerings. NFLX YTD mountain NFLX year to date But while that spending may hurt Netflix stock in the short term, there are several other signs that the stock may soon be due for a boost, per Goldman Sachs. For one, Netflix is likely to see its shares rise as its buyback activity normalizes, according to the analyst. In January, the streaming giant said it would stop buying back shares to fund its more than $40 billion bid to acquire Warner Bros. Discovery. However, Netflix signaled it would restart the buyback program after abandoning the acquisition in late February. The investment firm projects that Netflix could repurchase up to roughly 20 to 25% of its current market cap over the next five years, according to its recent note. “Now that Netflix has walked away from the deal (with WBD being acquired by PSKY), we expect a return to more regular capital returns (via buybacks) – management has consistently emphasized buybacks as an effective use of excess capital, repurchasing a cumulative ~$21bn since 2023 (or an average of ~90% of annual FCF),” Sheridan wrote. The entertainment platform is also showing signs of improving its top line, notching more paid subscribers and advertising revenue. Those developments could fuel compounded revenue growth by at least low double digit percentage points over the next three years or so, according to Goldman Sachs. Netflix also appears likely to gain ground as it maintains solid operating leverage over the next three years, in addition to notching sustained free cash flow conversion through “a combination of moderating cash content spend growth & overall opex discipline,” Sheridan said in his note. Netflix stock has gained 5% in 2026, outperforming the overall market.