Buy This Stock-Split Growth Stock With 44% Upside, According to a Wall Street Analyst

Netflix shares are down 13% since announcing a 10-for-1 stock split, but Wall Street sees upside with a median target of $115, implying 22% gains, and BMO's Brian Pitz targets $135 for 44% upside. Q1 revenue rose 16% to $12.2B and GAAP EPS increased to $1.23, though investors focused on the adjusted EPS miss after excluding a $2.8B termination fee and on softer Q2 guidance of $12.5B revenue and $0.78 EPS. The article argues Netflix still has room to grow, supported by 325M paid members, a $670B addressable market, and forward earnings valuation near 30x.

Analysis

The market is treating this as a simple post-earnings reset, but the more important second-order effect is that Netflix is transitioning from a pure subscriber-growth story to a monetization-and-margin compounding story. When a business with this level of engagement can still raise effective monetization without meaningful churn, the valuation floor tends to rise because downside is limited by recurring cash flow durability, not headline EPS noise. That makes the current drawdown more likely to be a sentiment-clearing event than a fundamentals break.

The key catalyst path is not the next quarter; it is whether pricing and ad load expansion show up in the back half of 2026. If that inflection is real, the stock can rerate well before reported earnings fully catch up, because the market will discount forward revenue mix and margin expansion ahead of the numbers. The risk is that investors are underestimating competitive response from other streamers and overestimating how frictionless future price increases will be in an increasingly saturated U.S. household base.

The split itself is a technical support factor. Historically, split announcements tend to attract retail and options participation, which can create a mechanical bid over the next several months even when fundamentals look noisy in the short term. In that setup, weakness after earnings often becomes a better entry point than strength, especially when sell-side target dispersion remains wide and the bullish case hinges on a 6-12 month narrative rather than near-term EPS prints.

The contrarian miss is that the headline guidance disappointment may be masking a healthier long-duration compounding engine. If ad monetization scales faster than consensus, Netflix could earn a premium multiple for being one of the few large-cap consumer internet names still capable of both pricing power and global share gains. That makes the setup asymmetric: limited evidence of structural deterioration, but meaningful upside if the market starts underwriting 2026 monetization rather than 2025 noise.

Key Decisions for Investors

• Go long NFLX on further post-earnings weakness, targeting a 6-12 month horizon; risk/reward improves if the stock retests prior support while the market still prices only the near-term guide.
• Use a call spread in NFLX instead of outright stock for the next 6-9 months; upside is tied to second-half-2026 monetization, while the premium paid is protected if price growth disappoints again.
• Pair long NFLX / short a basket of slower-growing streaming peers over 3-6 months; NFLX has the clearest path to pricing power and ad monetization, while weaker platforms face higher churn risk from future price hikes.
• Sell cash-secured puts in NFLX at levels modestly below current support for 2-3 month expiries; the split announcement and retail flow backdrop can cushion downside, but this only works if you are willing to own on another leg lower.