Key Moments
- HSBC initiated coverage of Netflix with a Buy rating and a $107 price target, highlighting recent share weakness as an entry point.
- The bank values Netflix at 34x projected 2026 earnings, implying 18% upside from current levels and supported by monetization and profitability gains.
- HSBC views the proposed $83 billion Warner Bros. Discovery deal as strategically attractive, with potential to lift 2028–29 earnings by 2% to 4%.
HSBC Launches Coverage With Bullish View
HSBC has started coverage of Netflix with a Buy recommendation and a $107 price objective, saying that the latest pullback in the stock has created an attractive opportunity for investors.
The bank noted that Netflix is trading “33% below its summer 2025 peak” even as its earnings trajectory strengthens and it maintains a significant international growth runway.
Valuation Framework and Upside Potential
In a note to clients, HSBC analyst Mohammed Khallouf explained that the team relies on a relative valuation framework for Netflix, using a 34x multiple on estimated 2026 earnings. This approach, according to the note, points to “18% upside.”
Khallouf highlighted three primary drivers underpinning the constructive outlook: continued progress in monetization, an improving profitability profile, and what he described as a “sizable international opportunity.”
| Metric | HSBC View / Assumption |
|---|---|
| Rating | Buy |
| Target price | $107 |
| Valuation multiple | 34x 2026 estimated earnings |
| Implied upside | “18% upside” |
| Share performance vs. peak | Trades “33% below its summer 2025 peak” |
| Proposed WBD deal size | $83 billion |
| Estimated 2028–29 earnings lift from merger | 2% to 4% |
Strategic Context: Warner Bros. Discovery Proposal
HSBC directly addressed Netflix’s $83 billion offer for Warner Bros. Discovery, which was announced in December. The bank said the transaction underscores growing pressures in a streaming sector that it views as maturing.
According to HSBC, Netflix’s core domestic market is now close to saturation, while competitive intensity has been rising, particularly from user-generated video platforms. The analysts wrote that “NFLX hours viewed only +1% y-o-y in 1H25,” pointing to the impact of YouTube’s growth and softer ratings for leading original titles as factors behind what they called a “more challenging” operating landscape.
HSBC’s Take on the Netflix-WBD Combination
Despite these headwinds, HSBC described the proposed Netflix and Warner Bros. Discovery tie-up as strategically attractive, stating that a combined entity “would be a winner.”
The analysts estimate that a merged group could boost earnings in 2028–29 by 2% to 4%, with further upside potential from packaging HBO content into bundles and enhancing premium offerings. On balance, HSBC concluded that Netflix’s “fundamental earnings outlook remains sturdy.”
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