On Tuesday, Guggenheim maintained a Buy rating on Netflix (NASDAQ: NASDAQ:NFLX) stock, with a price target set at $700. The firm's stance comes in anticipation of the National Football League's 2024-25 schedule release on May 15.
Netflix is reportedly on the verge of securing exclusive rights to two NFL Christmas Day games for the 2024 season, marking a significant advancement in the company's live sports offerings.
The acquisition of NFL game rights would place Netflix at a new frontier, following its ventures into the Netflix Cup, WWE rights, and the Paul vs. Tyson boxing event slated for July.
NFL games command the largest audience for live content in the United States, and the addition of just a couple of these games could significantly impact viewership, advertising, and content promotion for Netflix.
Guggenheim analysts estimate that the cost for Netflix to acquire a two-game slate would be in the range of approximately $200-250 million. However, the firm projects that these games could generate around $185 million in direct advertising revenue.
This figure does not account for potential increases in subscriber numbers, user engagement, or the overall promotional boost that could result from the deal.
The forecasted advertising revenue from the NFL games would represent a 15.7% increase over the current 2024 advertising revenue projection of $1.18 billion. This deal could, therefore, play a crucial role in Netflix's financial performance and its strategy to expand into live sports content.
InvestingPro Insights
As Netflix (NASDAQ: NFLX) ventures into live sports content, its financial metrics and market sentiment reflect a company poised for potential growth. With 25 analysts revising their earnings upwards for the upcoming period, there is a positive outlook on the company's earnings potential. Additionally, Netflix's strategic position as a prominent player in the Entertainment industry, combined with a P/E ratio of 42.01, suggests that it is trading at a low P/E ratio relative to near-term earnings growth. This could indicate an attractive entry point for investors considering the company's growth trajectory and recent ventures.
From a financial standpoint, Netflix boasts a market cap of $265.69 billion and has shown a revenue growth of 9.47% over the last twelve months as of Q1 2024. Its operating income margin stands at 22.54%, demonstrating the company's ability to convert revenue into profit efficiently. These figures, coupled with a high return of 81.41% over the last year, underscore the company's robust financial performance and investor confidence.
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