Deutsche Bank Upgrades Netflix to Buy, Citing Undervalued Growth Prospects

Deutsche Bank upgraded its rating on Netflix (NFLX) to Buy from Hold on Tuesday, asserting that the streaming company's stock is undervalued relative to its growth outlook. While the bank lowered its price target on the shares to $95 from $100, the new target still implies a potential upside of 37% from current levels.

Valuation Leaves Room to Run

In a note to clients, Deutsche Bank analyst Bryan Kraft explained the upgrade is based on the stock's valuation multiple. The bank's analysis shows Netflix is trading at 18 times its 2027 earnings estimate, a significant contraction from approximately 40 times forward earnings when the stock peaked in June 2025.

"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." The bank sees potential for the multiple to expand into the low-to-mid 20x range, alongside a projected 23% EPS growth in 2027.

International Strength and AI Opportunity

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Kraft argued that investors are overly focused on U.S. viewer engagement metrics, thereby overlooking more significant opportunities abroad. The note highlighted that time spent on the service internationally has increased year-over-year in each of the last four six-month periods.

Deutsche Bank also pointed to several other strategic advantages for the company:

• Global Production: More than 60% of Netflix's content is now produced outside the U.S., which the bank believes will help maintain its global leadership.
• Platform Potential: The company's brand, scale, and expertise position it to expand beyond content programming into a broader platform.
• Artificial Intelligence: The analyst views AI as "more friend than foe" for Netflix, expecting the technology-focused company to effectively leverage it for content production, personalization, and advertising.