<Research>CMSI Lowers Netflix (NFLX.US) Price Target to US$126 Following Strong Quarterly Results, Despite Missed Profit Margin Guidance

Netflix 4Q25 Results: Netflix reported 4Q25 revenue of US$12 billion, an 18% year-over-year increase, driven by successful content like the Stranger Things season finale, exceeding expectations.

Profit Margin Guidance: Despite meeting revenue forecasts for 1Q26 and the full year, Netflix's profit margin guidance fell short, causing a decline in share price during after-hours trading.

Broker Rating and Target Price: Citi maintained an Overweight rating on Netflix but reduced its target price from US$142 to US$126 due to increased discount rates and M&A risks, reflecting a 39x/33x PE ratio for FY2026/FY2027.

Impact of Warner Bros. Discovery Merger: The ongoing uncertainty surrounding the Warner Bros. Discovery merger is not expected to significantly affect Netflix's 2026 results, and the current stock price is considered attractive following a valuation correction.