“You’d be silly” to not buy Netflix right now, this investor says

Baskin Wealth Management analyst Barry Schwartz said a recent pullback in Netflix (Netflix Stock Quote, Chart, News, Analysts, Financials NASDAQ:NFLX) shares has created an attractive entry point, arguing the market is overemphasizing uncertainty around potential M&A rather than the company’s underlying fundamentals.

Speaking on BNN Bloomberg’s Market Call on Feb. 2, Schwartz said investor focus has shifted to speculation around a possible bidding process involving assets linked to Warner Bros. and Paramount Global, even as Netflix continues to deliver strong operating results.

“Once again, here’s a name that’s putting up terrific results and the market is nitpicking on unknowns,” Schwartz said. “Is it going to get Warner Bros.? No one knows. Is the deal going to go through? Nobody knows. But what we do know is Netflix just reported 13% revenue growth and is guiding to close to 20% profit growth.”

Schwartz highlighted Netflix’s expanding content slate, including returning flagship series, increased exposure to live events such as wrestling, and a deeper push into sports programming. He said the company ended the year with roughly 325 million subscribers, up about 8 per cent year over year, reinforcing its scale advantage and pricing power.

“You don’t know what other services it’s going to get into next,” he said, pointing to early initiatives in video games and podcasts and the longer-term opportunity to compete more directly with platforms such as YouTube and Meta in short-form video.

Addressing concerns about potential acquisition spending, Schwartz said valuation mitigates much of the risk.

“If they do get it, they’re paying what we think is a pauper’s price for a very high-quality business with some of the best IP in the world,” he said, citing franchises such as Harry Potter and Game of Thrones. “At around 10 times free cash flow for those assets, we’re very comfortable with it.”

Schwartz added that even without a transaction, Netflix remains compelling at current levels.

“At roughly 20 times earnings for one of the world’s best companies, you’d be silly not to buy it here,” he said.

Netflix shares have declined about 14% over the past 12 months but are up more than 70% over the past five years.

The majority of analysts maintain bullish ratings; 40 rate it “Buy,” 17 “Hold,” and 1 “Sell,” with a consensus price target of US$110.07.

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