NEW YORK — Deutsche Bank upgraded Netflix (NASDAQ:NFLX) to Buy from Hold in a Tuesday note to clients. Analyst Bryan Kra the streaming company's recent valuation compression creates substantial upside, projecting a 37 percent increase from current levels.
Kraft trimmed the price target on Netflix shares to $95 from $100. This adjustment followed reduced operating income and free cash flow forecasts, yet the revised target still indicates upside.
Netflix now trades at 18 times Deutsche Bank's 2027 earnings estimate. Kra this contrasts sharply with the roughly 40 times forward earnings valuation observed in June 2025, when the stock reached its peak.
Kra a 40x multiple was never a reasonable valuation for Netflix given its decelerating growth outlook. However, he believes the current 18x multiple undervalues the company's healthy growth trajectory, allowing for potential multiple expansion into the low-to-mid 20x range.
This re-rating comes alongside a projected 23 percent EPS growth for Netflix in 2027. Kraft argued that investors are overly focused on U.S. subscriber engagement metrics.
He contended that this narrow focus overlooks Netflix's broader global opportunity and the stronger engagement trends outside the United States. Time spent on the platform in international markets has increased year over year for each of the past four six-month periods.
Kraft also emphasized Netflix's strategic advantage in international content creation. Over 60 percent of the company's programming now originates outside the U.S.—a shift he believes will solidify its worldwide leadership position.
Beyond content, Kraft added that Netflix's established brand strength, operational scale, and capabilities position it to evolve into a broader platform. This expansion would move the company beyond its current role solely as a producer and programmer of its own titles.
Artificial intelligence represents another catalyst, with Kraft describing it as more beneficial than detrimental to the company. Netflix, having relied on technology since its inception, is well positioned to integrate AI across content creation, user personalization, and advertising.
Kraft expects Netflix to deploy AI more effectively than its competing streaming services, leveraging its existing technological infrastructure. The $95 price target is based on these combined factors, including valuation reset and growth catalysts.
