HSBC has initiated coverage of Netflix with a Buy rating and set a $107 price target, arguing that the stock’s recent pullback has created an opportunity for investors.

The bank said Netflix shares are trading about 33% below their summer 2025 peak despite what it described as a strengthening earnings profile and expanding monetisation.

HSBC Netflix valuation

HSBC analyst Mohammed Khallouf said the firm values Netflix using a relative valuation approach, applying a 34x multiple to estimated 2026 earnings.

Based on that methodology, HSBC sees roughly 18% upside from current levels.

Netflix earnings and monetisation

The bank pointed to improving profitability and deeper monetisation as key drivers of its positive outlook.

HSBC also highlighted Netflix’s long runway for international growth, describing overseas markets as a significant source of future earnings expansion.

While noting Netflix’s strengths, HSBC acknowledged that the company’s domestic streaming market is nearing saturation.

The bank said competition from user-generated video platforms continues to intensify, creating pressure across the streaming industry.

Netflix-Warner Bros. Discovery bid

HSBC directly addressed Netflix’s $83 billion bid for Warner Bros. Discovery, announced in December, describing it as a response to growing structural challenges in the streaming sector.

The bank noted that Netflix’s hours viewed grew only 1% year over year in the first half of 2025, while increased competition and declining ratings for some original content have made the environment more difficult.

Strategic impact of Netflix-WBD deal

Despite those challenges, HSBC views the proposed Netflix-Warner Bros. Discovery combination as strategically compelling.

Analysts estimate the merged entity could increase earnings by 2% to 4% in 2028 and 2029, with additional upside potential from content bundling and expanded premium offerings.

HSBC said that even amid rising competition and a maturing market, Netflix’s fundamental earnings outlook remains solid, supported by scale, pricing power, and international expansion.