Netflix Upgraded to Buy at Deutsche Bank on International Growth Outlook

Deutsche Bank has upgraded shares of Netflix (NASDAQ:NFLX) to Buy from a previous Hold rating, establishing a new price target of $95. The bank's analyst argues that the market is overly focused on U.S. engagement trends while undervaluing the streaming giant's powerful international growth and significant valuation compression.

The Analyst's Rationale

In a note to clients, Deutsche Bank analyst Bryan Kraft highlighted that Netflix's stock has declined 44% from its June 2025 peak, leading to a substantial reset in its valuation. The company's forward price-to-earnings multiple has contracted from approximately 40x at its peak to 18x based on 2027 earnings estimates, a level the bank sees as an attractive entry point.

The core of the bull thesis is Netflix's international business. According to the note, key drivers include:

• Over 60% of Netflix's content is now produced outside the United States.
• International time-spent on the platform has grown year-over-year in each of the past four six-month periods.
• The company's technology-focused approach gives it an edge in leveraging AI for content personalization and advertising compared to legacy media rivals.

Contrasting Views and Market Risks

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The upgrade from Deutsche Bank stands in contrast to more cautious recent sentiment. Wells Fargo recently downgraded Netflix to Underweight with a $57 price target, citing concerns about declining viewership and a weak content slate for the second half of 2026. HSBC also moved to a Hold rating on concerns over subscriber engagement.

Broader market headwinds include potential pricing fatigue among consumers. A recent survey indicated that 39% of Americans canceled at least one streaming subscription in the past six months, underscoring a competitive and saturated market.

A Look at the Fundamentals

Despite the stock's recent downtrend, Netflix's financial metrics remain strong. The company's revenue grew from $29.7 billion in fiscal 2021 to $45.2 billion in fiscal 2025, while its EBITDA nearly doubled over the same period. The company maintains elite capital efficiency for a media firm, with a trailing twelve-month return on equity of 49.5% and a net profit margin of 28.2%.