JPMorgan bullish on Netflix into results, sees limited ad tier growth

JPMorgan analyst Doug Anmuth remains bullish on Netflix shares heading into the Q4 earnings report on January 19. He likes the company’s ability to reaccelerate revenue, expand operating margins and grow free cash flow in 2023. There is considerable focus on the recent advertising tier launch as it expands Netflix’s reach to more price-sensitive consumers, but it is still very early and its impact will take time, Anmuth tells investors in a research note. Netflix has done limited promotion or marketing around the ad tier and overall consumer awareness is low, says the analyst. As a result, he projects "only" 250,000 net adds in Q4 to the ad tier, or 5% of the estimated total 4.75M net adds for the quarter. Anmuth keeps an Overweight rating on Netflix shares with a $330 price target.