Netflix, Inc. (NASDAQ:NFLX) is facing competitive pressures amid heightened industry consolidation, following the Paramount Skydance Corporation (NASDAQ:PSKY) merger and reports suggesting a possible Warner Bros. Discovery, Inc. (NASDAQ:WBD) acquisition bid.
Bank of America expects Netflix's third-quarter 2025 results to match guidance, forecasting revenue of $11.53 billion and operating income of $3.63 billion.
Strong Viewership Boosts Content Momentum
The firm highlighted strong content execution, with Canelo–Crawford attracting 41.4 million viewers and KPop Demon Hunters becoming Netflix's most-watched film with 325 million views.
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Analyst Jessica Reif Ehrlich reaffirmed the Buy rating with a $1,490 price forecast, implying 22% upside from the Oct. 15 price of $1,219.03, citing continued subscriber and earnings momentum supported by advertising and live-event growth.
Netflix shares have fallen 4% since early September, trailing the S&P 500's 2% gain, amid renewed competition concerns and merger speculation following the PSKY deal and reports of a potential WBD bid.
The rise of AI-driven platforms such as OpenAI's Sora also adds pressure. Bank of America said Netflix's scale and tech-first model should sustain its streaming leadership.
Netflix will integrate with Amazon.com, Inc.'s (NASDAQ:AMZN) DSP in the fourth quarter to expand ad-buying options. The move should strengthen ad demand as the company advances on first-party data use, measurement, and dynamic ad insertion.
Long-Term Growth Outlook Remains Solid
The bank projected earnings per share at $26.21 in 2025, rising to $32.61 in 2026 and $40.26 in 2027. Revenue is forecast to grow from $45.10 billion in 2025 to $50.74 billion in 2026 and $56.85 billion in 2027.
The price forecast is based on about 39x 2026E EBITDA, supported by a DCF model assuming a 6.5% terminal growth and 10.2% Weighted Average Cost of Capital. BofA cited competition, industry consolidation, and slower ad-tier ramp-up as key downside risks.
Price Action: NFLX shares were trading lower by 0.58% to $1208.28 at last check Wednesday.
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