Wedbush Remains Bullish on Netflix (NFLX) Despite Short-Term Margin Setback

Netflix Inc. (NASDAQ:NFLX) is one of the best stocks to buy according to Citadel LLC. On October 22, Alicia Reese, the Consumer Entertainment Products analyst at Wedbush Securities, lowered her price target on the stock from $1,500 to $1400, while keeping the Outperform rating intact, according to TheFly. She revised her estimates after the company reported Q3 2025 results on October 21.

Reese noted that the company has been reporting strong results for many quarters, and thus, the softer Q3 results and Q4 guidance came as a disappointment to the investors. She cited the results of a recent survey by the firm and other data to show that Netflix’s subscriber base continues to grow and that its offerings remain sticky despite price hikes. This, as she sees it, fundamentally positions the company to capitalize on global advertising growth, which becomes an important pillar of her investment case.

For context on Q3, Netflix Inc. (NASDAQ:NFLX) reported an unexpected $619 million expense related to Brazilian tax disputes, which shaved 5% off this quarter’s operating margin. The company doesn’t expect any material impact on future financials.

Reese discussed this impact and broader results in a Bloomberg interview on October 23. She stated:

“Well, they took the tax from 2022 to the present. And so, if you look at it on a holistic basis, it was over 300 basis points impact to operating margin in the quarter. So that’s why there was such a huge miss. But if you look forward, if you extrapolate that, it’s only going to be about 20 basis points hit annually going forward.” “I had slightly higher expectations. The thing is that Netflix was trading at such a high multiple, it has to continually knock it out of the park. And revenue was in line roughly, and the fourth-quarter guidance didn’t impress, you know, extravagantly as Netflix typically does, and that’s one of the big reasons I think the stock’s trading down. That being said, I think there’s still plenty that you could pick out of the earnings call and the shareholder letter. They’re very exciting for the future.”

Netflix Inc. (NASDAQ:NFLX) is a global streaming entertainment platform offering on-demand media content across more than 190 countries through a subscription-based model.

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Disclosure: None. This article is originally published at Insider Monkey.