Goldman Sachs upgrades its rating to "Buy" ahead of Netflix's earnings report

Goldman Sachs raised its Netflix rating from “Neutral” to “Buy,” saying the risk-reward profile improved ahead of the company’s earnings report on April 16. The firm also raised its price target to $120, implying roughly 26% upside from current levels.

Before this rating upgrade, Netflix’s share price fell 16% over the past six months. Goldman Sachs believes part of the decline was due to lingering pressure stemming from the company’s earlier plans to bid for assets of Warner Bros. Discovery. Since Netflix has abandoned that deal and received about $2.8 billion in termination fees from Paramount Global, analyst Sheridan believes Netflix will return to a narrative track of independent execution, with room for positive earnings forecast revisions.

Goldman Sachs’ bullish rationale is based on three layers. First is the revenue contribution from the U.S. market price increases scheduled for March 2026; the firm estimates this will add $3.0 billion in cumulative revenue in 2026 and 2027. Second is about 250 basis points of GAAP operating margin expansion each year over the next three years. Third is capital returns; given that M&A is no longer considered within scope, the company’s proposed $11.0 billion free cash flow target for 2026 could be described as somewhat conservative.

Advertising monetization is a longer-term driver. Goldman Sachs expects Netflix’s advertising revenue to rise from about $1.5 billion in 2025 to about $4.5 billion in 2027, and to approach $9.5 billion by 2030.

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