Netflix stock rose Tuesday after Morgan Stanley called the internet television network its "top pick" among media and entertainment stocks.
The investment bank previously had designated media conglomerate Disney its top pick in the sector. But Netflix is a "more defensive" stock in the current market climate, analyst Benjamin Swinburne said in a client note.
Swinburne says he expects Netflix to demonstrate relative resilience in a weaker global macro backdrop. Momentum in its core subscription business, combined with recent U.S. dollar weakness, should de-risk 2025 estimates, even in a softer advertising market, he said.
He kept his overweight, or buy, rating on Netflix stock with a price target of 1,150.
On the stock market today, Netflix stock rose 0.3% to close at 870.40.
Elsewhere on Wall Street, J.P. Morgan analyst Doug Anmuth reiterated his overweight rating on Netflix stock but lowered his price target to 1,025 from 1,150.
"We believe Netflix is likely most resilient within our coverage — but it's not immune — and therefore we are trimming our estimates," he said in a client note.
"Netflix should prove more defensive against macro headwinds given strong engagement (about 2 hours/member household/day), historically low churn, high entertainment value to price ratio, and the still new-ish ad tier ($7.99/month in the U.S.), which makes Netflix widely accessible."
That said, consumers are still likely to "comb through (their) credit card bills" and look for places to save money in a tough economic environment, Anmuth said.
J.P. Morgan on Tuesday reduced its estimates, multiples and price targets on 25 companies in the internet sector, citing tariff impacts, macroeconomic headwinds, and a potential recession.
Netflix Stock 'Should Prove Relatively More Resilient'
J.P. Morgan economists predict a 60% chance of recession in 2025, with U.S. real GDP declines in the second half of 2025. The firm believes e-commerce, online travel, and digital advertising names are the most exposed.
Streaming subscriptions, cloud services, ride hailing and food delivery "should prove relatively more resilient," the firm said. "There is no macro immunity in the Internet space, only degrees of resilience."
Anmuth likes both Netflix and Spotify Technology "for their leadership positions, secular growth, and defensive subscription nature." He rates Spotify as overweight, but cut his price target to 640 from 730.
Also Tuesday, TD Cowen analyst John Blackledge reiterated his buy rating on Netflix stock with a price target of 1,150.
In a client note, Blackledge said he expects Netflix to deliver an upbeat first-quarter report on April 17.
"We view Netflix as the most defensive name in our universe amid a tougher macro backdrop," he said. "Our Q1 survey shows Netflix remains the top choice for living room viewing."
Netflix stock is on three IBD lists: Leaderboard, IBD 50 and Big Cap 20.
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