NFLX Stock In Focus: Wall Street Weighs Subscriber Churn And Content Pipeline Concerns Ahead Of Q2 Earnings

• Morgan Stanley's Sean Diffley lowered Netflix's price target to $90 from $115 but maintained an Overweight rating. 
• The firm cited concerns that price hikes, seasonal weakness and a lighter content slate may have increased subscriber churn.
• Barclays cut Netflix's price target to $85, citing increased investor focus on media industry deal activity. 

Netflix Inc. (NFLX) is drawing skepticism from Wall Street analysts ahead of its fiscal second-quarter (Q2) earnings as they weigh whether recent subscription price hikes, a seasonally weaker period and a lighter content slate have triggered higher-than-usual subscriber churn.  

Morgan Stanley Stays Cautiously Optimistic On Netflix 

Sean Diffley at Morgan Stanley cut the price target on Netflix shares to $90 from $115, while maintaining an ‘Overweight’ rating. The new price target still implies a 22% upside to the stock’s last closing price. 

The brokerage said investors remain concerned that a previous subscription price increase, combined with a traditionally slower seasonal period and a lighter lineup of new programming, may have led to higher-than-normal customer cancellations.

Despite these concerns, Morgan Stanley expects Netflix’s Q2 results to be in line with analysts’ estimates. The firm also anticipates the company’s Q3 outlook to match Street expectations and believes Netflix will reaffirm its 2026 financial guidance. 

Netflix stock inched up 0.3% overnight on Tuesday. 

Barclays Flags Media Deal Activity As Key Earnings Focus 

Barclays also lowered its price target on the streaming giant to $85 from $110 while keeping an ‘Equal Weight’ rating. The move was part of the firm's broader review of media companies ahead of Q2 earnings announcements.

The firm said investors are increasingly focused on deal activity across the media industry, including announced and rumored transactions, rather than solely on quarterly operating performance. Even if advertising trends deliver upside surprises, the firm believes broader industry developments may dominate investor attention during the earnings season.

Netflix has walked away from potential deals involving Warner Bros. Discovery (WBD) assets and failed to win the bidding contest for Roku (ROKU). 

Analysts at Oppenheimer, KeyBanc, Citi and Bernstein also slashed their price targets for Netflix because they believe the stock's valuation is high, but they kept positive ratings, pointing to the company's strong long-term growth prospects.

Netflix will report Q2 earnings on Thursday, and analysts expect $12.58 billion in revenue and $0.79 per share, according to Fiscal AI data.   

What NFLX Retail Traders Are Saying 

On Stocktwits, retail sentiment around the stock remained in ‘bullish’ territory. The stock saw a 22% increase in message volume over the past week with a 0.1% gain in watchers. 

A user said, “$NFLX actually attractive here. Grabbed some for the IRA and hedged with further-out covered calls. No worries here.”

Another user said, despite a sharp decline in its stock price, Netflix continues to post strong business performance, and the gap between the company's improving fundamentals and its falling share price suggests the stock may be undervalued. 

NFLX stock has slumped 21% year-to-date. 

Also See: BIIB Stock On Track For Worst Day In 2 Years After RBC Questions If Alzheimer’s Drug Benefits Will Replicate In Further Study

For updates and corrections, email newsroom[at]stocktwits[dot]com.