Goldman Sachs Group, Inc.: Netflix (NFLX.US) exceeding expectations in performance may lead to positive market response, with a target price of $955.

Goldman Sachs Group, Inc. released a research report stating that Netflix's first-quarter financial report exceeded expectations in several key indicators, and the market is expected to react positively to this. They have set a 12-month target price for Netflix at $955 and rated it as "neutral". Goldman Sachs Group, Inc. analyst Eric Sheridan pointed out that key points from this financial report and the shareholder letter include: membership growth driving robust revenue performance, the impact of pricing adjustments in certain quarters, a significant increase in operating profit margin compared to the previous quarter (with profit margin guidance also exceeding expectations), and shareholder buyback size far exceeding the bank's expectations before the financial report was released. Specifically, Netflix's total Q1 revenue increased by 13% year-on-year (16% growth when calculated at fixed exchange rates), reaching $10.54 billion, higher than Goldman Sachs Group, Inc.'s expectation of $10.42 billion and the market expectation of $10.5 billion reported by FactSet. Revenue performance in different regions was solid, with revenue in the US and Canada reaching $4.62 billion, Europe, the Middle East, and Africa reaching $3.41 billion, Latin America reaching $1.26 billion, and Asia-Pacific reaching $1.26 billion, all meeting or slightly exceeding expectations. Netflix's GAAP operating profit in the first quarter was $3.35 billion, significantly higher than Goldman Sachs Group, Inc.'s expectation of $2.95 billion and the market expectation of $3 billion, with an operating profit margin of 31.7%, also higher than expected. Earnings per share were $6.61, higher than Goldman Sachs Group, Inc.'s expectation of $5.60 and the market expectation of $5.69. Netflix's guidance for Q2 2025 is also impressive. The company currently anticipates total Q2 revenue to reach $11.04 billion, a 15% year-on-year increase (17% growth when calculated at fixed exchange rates), higher than Goldman Sachs Group, Inc.'s expectation of $10.8 billion and the market expectation of $10.89 billion. GAAP operating profit is forecasted to be $3.68 billion with an operating profit margin of approximately 33.3%, and earnings per share expected to be $7.03, all higher than market and Goldman Sachs Group, Inc.'s expectations. For the fiscal year 2025, Netflix reiterated its previous guidance, with total revenue expected to be between $43.5 billion and $44.5 billion, and a GAAP operating profit margin target of 29.0%. Looking ahead, Sheridan believes that the market's focus will continue to be on the impact of pricing strategies, expansion of advertising tiers, and the difference in operating profit margin performance between the second half and first half of the year. Sheridan also pointed out potential downside risks, including user growth being higher or lower than expected, the timing and extent of price adjustments and their impact on user churn rates, the pace of execution in cracking down on password sharing and expanding advertising-supported tier, which may be faster or slower than expected, and intensified industry competition that may affect user growth, original content attractiveness, and consumer engagement.