Deutsche Bank upgraded its recommendation on Netflix shares to Buy

Deutsche Bank upgraded its rating on Netflix shares from Hold to Buy. According to the bank's assessment, the stock's current market value does not adequately reflect the company's growth prospects, which creates potential for further price appreciation.

At the same time, Deutsche Bank lowered its price target for Netflix shares from $100 to $95. The decision is linked to a revision of operating profit and free cash flow forecasts. Despite the reduction, the new price target still implies approximately 37% upside potential for the stock.

According to the bank's analyst, Brian Kraft, Netflix shares are currently trading at roughly 18 times Deutsche Bank's 2027 earnings forecast. For comparison, in June 2025, when the stock price peaked, this multiple stood at around 40.

According to Kraft, given the slowdown in Netflix's growth rate, a 40x valuation was not justified for the company. However, in his view, the current 18x multiple still fails to adequately reflect the company's still-strong growth prospects. The analyst believes the stock's valuation could rise to a range of 20 to 25, a move that would also be supported by a projected 23% increase in earnings per share for 2027.

According to Kraft, investors are placing excessive focus on how much time American viewers spend on the Netflix platform. In his view, this overlooks growth opportunities in international markets and more positive dynamics in user engagement. According to the analyst, time spent on the platform outside the US has been growing year-over-year over the past four six-month periods.

Deutsche Bank is also highlighting Netflix's position in international content production. More than 60% of the company's content is already produced outside the US, which, according to Kraft, will help Netflix maintain its leadership in the global market.

The analyst believes that brand recognition, scale and experience allow Netflix to evolve beyond being solely a producer and distributor of its own series and films, and to develop into a broader digital platform.

Kraft also views artificial intelligence as an opportunity for Netflix rather than a threat. In his assessment, the technology-focused company's experience will enable it to effectively leverage AI in content production, personalizing recommendations for users, and advertising, giving it an edge over competing streaming platforms.