Needham & Company has upgraded its outlook on Netflix, predicting a potential increase of nearly 20% in the streaming giant’s stock price. The firm raised its price target to $1,500, up from $1,126, indicating a possible upside of 19.9% based on the stock’s closing price on Thursday. This optimistic projection comes amid strong trends in labor productivity, which analysts believe could further enhance Netflix’s financial performance in the coming months.
In a note released on Friday, Needham analyst Laura Martin emphasized the importance of employee quality and company culture in driving financial returns. She stated, “We link the notion of employee quality and culture to financial returns and argue that absolute returns, trends in returns and relative returns per employee are key quantitative metrics to determine whether a company employs high-quality (i.e., value-creating) employees, or not.”
Martin’s analysis revealed that Netflix’s annual labor costs exceed its substantial content spending of $17 billion each year. This insight suggests that trends in labor productivity serve as a leading indicator of the company’s share price performance. In fiscal 2024, Netflix achieved the highest revenue per full-time equivalent (FTE) at $2.78 billion, significantly outperforming other major companies, including Apple, Meta Platforms, and Alphabet. The report noted that Netflix’s average revenue per FTE is nearly double that of nine large-cap companies within Martin’s coverage.
Furthermore, Martin pointed out that Netflix’s free cash flow per FTE improved dramatically, shifting from negative to positive between fiscal years 2021 and 2024. This change reflects an increase of $506,095 per FTE over four years. She expects this positive trend to continue, driven by revenue growth that exceeds FTE growth, supported by price increases for its Subscription Video on Demand tier and ad revenue growth from its ad-supported tier.
Netflix’s stock has significantly outperformed the S&P 500 in recent months, soaring over 49% in the last six months and more than 40% year to date. In contrast, the S&P 500 has seen a modest increase of nearly 8% over the past six months and almost 7% in the year 2025.
Investor sentiment seems to align with Martin’s positive outlook. According to LSEG data, out of 49 analysts covering Netflix, 34 have assigned a strong buy or buy rating, while 15 analysts hold a hold rating. In premarket trading on Friday, Netflix shares experienced slight gains, reflecting the general optimism surrounding the company’s future performance.
