Down 14% in a month, target prices differing by $78: Wall Street is split on Netflix (NFLX.US) with "two sets of standards"

Notice that Netflix (NFLX.US) plunged 14% in September, with its stock price falling to around $71, approaching the $65 low touched during the post-earnings selloff in July. Down 26% year to date and 48% from its June 2025 high, the streaming giant is heading for its worst year since 2022 and has joined the ranks of the 50 worst-performing S&P 500 constituents. However, even more striking than the share price is the split in target prices: analyst target prices for the stock range all the way from $57 to $135, with an average of about $93, implying roughly 30% upside from the current price - bulls and bears each hold their own view, and the spread in target prices is as wide as $78. Bears: Engagement has become the only scoreboard, and the scoreboard is deteriorating Wells Fargo & Company analyst Steven Cahall downgraded Netflix from "Equal Weight" to "Underweight" on September 18, slashing his target price from $80 to $57, the lowest on Wall Street and the stock's first sell-equivalent rating in months. His logic points directly at Netflix's new scoreboard: after the company stopped disclosing subscriber data, viewing time has become the only verifiable metric for the market. Cahall estimates that adjusted viewing time in the first half of 2026 will decline 8% year over year, to about 1.6 hours per day; in the second half, viewing time for the top 100 original series will fall 21% year over year. "Netflix lacks big hits, and it is already showing," he warned. If its valuation logic moves closer to that of "hit-driven" media peers, a 15x forward P/E implies the stock still has about 20% downside, and he moved the risk of subscriber churn in 2027 onto the table early. HSBC's perspective is external competition. On September 22, the bank downgraded the rating from "Buy" to "Hold" and cut its target price from $96 to $76. Its basis is that YouTube, owned by Alphabet (GOOG.US), is continuously eroding Netflix's share on connected TVs in the living room: in July, YouTube's share of U.S. TV viewing time reached 14.2%, a record high, while Netflix fell to 7.8%, a multi-year low. Bulls: Do not misread a global platform through U.S. viewing time Deutsche Bank Aktiengesellschaft bucked the trend on Tuesday by upgrading the stock to "Buy," trimming its target price slightly from $100 to $95. The bank believes the market's "obsession" with U.S. viewing time ignores a larger total addressable market: Netflix's international viewing time has achieved year-over-year growth in each of the past four and a half semiannual periods, the company has an "established competitive advantage and significant lead" in international content production, and the current valuation offers an attractive entry point. Evercore ISI, meanwhile, brought out its own hard data: its 58th U.S. quarterly survey and 12th Japan semiannual survey show U.S. household penetration at 63%, a multi-year high, and Japan at 22%, a record; user satisfaction in Japan is 67%, and 58% of surveyed subscribers said they are unlikely or very unlikely to cancel; among U.S. users considering leaving, 35% would switch to the ad-supported tier. Based on this, Evercore raised its target price from $100 to $110 and maintained its "Outperform" rating. The leader among the bulls is BMO Capital. Analyst Brian Pitz, after a survey of 940 U.S. consumers, maintained an "Outperform" rating and a $135 target price - the highest on Wall Street. The survey shows that 75% of respondents subscribe to Netflix, 37% regard it as their preferred streaming platform, twice the rate of the second-place competitor; 76% of subscribers use it multiple times a week. Pitz believes the market has become "overly pessimistic" about Netflix, that the advertising business will become a catalyst, and noted that its current valuation is 16.1x forecast fiscal 2027 adjusted EBITDA, a 31% discount to its five-year average. In addition, Bank of America Corp (target price $125), UBS Group AG ($115), Citi ($100), TD Cowen ($100), Goldman Sachs Group, Inc. ($94), KeyBanc ($92), and others still maintain buy stances. Third-quarter earnings become an important checkpoint Underlying this debate is a mismatch in methodology: the bears look at "how long each subscriber watches" and read deterioration; the bulls look at "how many households are using it" and read resilience. Investor Eric Clark's "show-me story" sums up the market consensus - Netflix needs a hit, a top-100-level series, to prove there is no creativity problem in its content pipeline, while rival streaming platforms are producing the most closely watched series. It is worth noting that the selloff is largely stock-specific: The Walt Disney Company (DIS.US) only pulled back slightly, and the Communication Services ETF (XLC) rose rather than fell, indicating that this is a repricing aimed at the content narrative, not a sector-wide washout. The fiscal third-quarter earnings report on October 20 will be the next checkpoint to watch, while the engagement report to be released alongside fourth-quarter results in January next year will be the final ruling on which of the two sets of standards is right.