Published -July 10th, 2023 @ 4:07 PM (GMT+2)

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Morgan Stanley and ClearBridge's Analysis on Netflix
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‍In the world of financial market analysis, both Morgan Stanley and ClearBridge Investments have taken note of Netflix, Inc. (NASDAQ:NFLX), with each providing unique insights. According to a letter to clients shared this Monday, Morgan Stanley remains neutral on Netflix shares, raising the price target for the stock from $350 to $450. The firm continues to harbor bullish sentiments towards Netflix’s business model, mainly due to Netflix's persistent execution, the withdrawal of competitors, and disciplined expense trends that collectively enhance its outlook.

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Analysts at Morgan Stanley see a balanced risk/reward, and despite their optimistic views on the streaming giant, they recommend waiting for a better entry point for potential investors. They project a +20% 3-year forward EPS CAGR for Netflix by the end of 2024, justifying a premium multiple. However, the company cautions about the potential risk of numerous compression over the next 12 months, citing that the NFLX EV has increased almost 50% or $65 billion year-to-date, surpassing the $200 billion mark. Concurrently, the consensus '24 adjusted EPS estimates have risen about 10% YTD, which implies that the '24E P/E multiple has increased 35-40% YTD.

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The Impact of Netflix's Paid Sharing
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Ever since Netflix introduced paid sharing in the United States on May 23rd, the company has added approximately $40 billion in EV. Analysts also observed that Netflix's paid sharing price points indicate more net additions than extra members compared to the firm's previous forecast, leading them to believe that "Netflix is poised to demonstrate how good a business streaming can be at scale."

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ClearBridge's Q2 2023 Highlight on Netflix
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ClearBridge Investments, meanwhile, spotlighted Netflix in its “ClearBridge Large Cap Growth Strategy” for the second quarter of 2023. During this quarter, the market’s emphasis on generative AI steered mega-cap growth stocks, including Netflix, to outperform. Consequently, ClearBridge's strategy exceeded its benchmark, the Russell 1000 Growth Index, during a high-beta-driven period of mega-cap supremacy.

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Netflix’s Recent Performance and ClearBridge's Strategy

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• Shares closed at $438.10 per share
• One-month return rate of 3.33% 
• 52 weeks - shares risen by 147.04 %
• Market cap $194.753 billion

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ClearBridge, in its investor letter, pointed out that its comparable results over the past 12 months have bounced back due to better stock picking, particularly among earnings reset companies like Netflix.

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