Netflix has had a rough six months. Goldman Sachs thinks that is exactly why now is the time to buy.
Goldman Sachs upgraded Netflix from neutral to buy on April 6, raising its 12-month price target to $120 from $100, implying roughly 26% upside from current levels. The upgrade was authored by analyst Eric Sheridan, who cited a “more positive risk/reward from current levels” heading into Netflix’s first-quarter earnings report on April 16.
Netflix shares had fallen approximately 18% over the prior six months, a decline Goldman attributed in part to overhang from the company’s now-abandoned bid to acquire Warner Bros. Discovery’s streaming and studio assets. The stock responded to the upgrade, rising roughly 3% in premarket trading on April 6.
Why Goldman turned bullish on Netflix
Goldman’s case rests on three distinct arguments.
The first argument is valuation. With the Warner Bros. Discovery deal off the table, Netflix collected a $2.8 billion merger termination fee from Paramount Skydance Corporation and returned to what Goldman described as a “standalone execution story” with scope for a positive estimates revision cycle.
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Netflix currently trades at a price/earnings-to-growth ratio of around 1.1 times, well below its five-year historical average of approximately 1.65 times, which Goldman views as an entry point.
The second argument is revenue acceleration. Netflix raised prices across its U.S. subscription tiers in March 2026, the second increase in 15 months.
The Standard ad-free tier rose $2 to $19.99 per month, Premium rose $2 to $26.99, and the ad-supported tier rose $1 to $8.99, according to Artvoice. Goldman estimates those adjustments could generate a combined $3 billion in additional revenue through 2026 and 2027.
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The advertising business is the longer-horizon driver. Goldman projects Netflix’s ad revenue will climb from approximately $1.5 billion in 2025 to about $4.5 billion by 2027, reaching nearly $9.5 billion annually by 2030. Netflix’s own management has said it expects to roughly double ad revenue during 2026 alone, according to CoinCentral.
The third argument is capital returns. Netflix repurchased $21 billion of its own stock since 2023, averaging around 90% of annual free cash flow, before pausing buybacks during the acquisition process. Goldman outlined a scenario in which Netflix repurchases 20 to 25% of its current market cap over the next five years, which would deliver meaningful earnings per share accretion.
The Netflix margin and cash flow picture
Goldman forecasts about 2.5% of annual GAAP operating income margin expansion for Netflix over the next three years, supported by moderating content spending growth and broader cost discipline.
The bank also suggested that Netflix’s own guidance of roughly $11 billion in free cash flow for 2026 may prove conservative now that the Warner Bros. acquisition is off the table and the company has returned its focus to organic growth.
Goldman’s three pillars for the Netflix bull case:
- Revenue growth: March 2026 U.S. price hikes are projected to add $3 billion across 2026 and 2027, with ad revenue reaching approximately $9.5 billion annually by 2030.
- Margin expansion: It’s predicted at approximately 2.5% of annual GAAP operating income margin growth over three years, supported by cost discipline.
- Capital returns: Goldman sees a scenario where Netflix repurchases 20% to 25% of its current market cap over five years, with $11 billion 2026 free cash flow guidance seen as potentially conservative.
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Other analysts’ take on Netflix
Goldman is not alone in its optimism. BofA Securities has reiterated a buy rating with a $125 price target, citing confidence in Netflix’s pricing power and growth opportunities, according to Investing.com.
Needham projects the March price hikes will add approximately $1.7 billion in incremental revenue and contribute around 3% of North American growth for fiscal 2026, according to Artvoice.
Of 51 analysts covering the stock, 37 recommend buy or strong buy, with the 12-month average target sitting at $113.43, according to Stocktwits, citing Koyfin data.
Goldman is also watching Netflix’s expanding content ambitions. The company is in discussions to expand its NFL game package, aiming to add a Thanksgiving Eve game and an international game, according to Investing.com. Netflix is currently in the final year of its three-year Christmas Day game package.
Netflix reports first-quarter 2026 earnings on April 16 after market close. That report will be the first major data point after the Warner Bros. deal collapse, the March price hikes, and a period of significant stock weakness.
Goldman is betting the numbers will validate the upgrade.
Related: Netflix raises prices for U.S. subscribers again
