Netflix Inc saw its price target lowered by BMO Capital, though the firm retained a positive outlook on the streaming giant. Analyst Brian Pitz cut the target from $135 to $125 while maintaining an Outperform rating.

The adjustment reflects a revised valuation model for the company. Despite the reduction in the price objective, the analyst's stance remains bullish, indicating confidence in the underlying business fundamentals relative to the new target level.

Rating and Target Details

The following table summarizes the key changes in BMO Capital's coverage of Netflix:

The maintenance of the Outperform rating suggests that while the expected upside has been trimmed, the stock is still viewed as having potential value above its current trading levels.

Netflix Inc has appointed Peter Rice as its new Chief Content Officer, replacing Bela Bajaria who is leaving after nearly 10 years. This leadership change occurs one day after the company announced layoffs of about 1,000 employees.

Rice, most recently chairman of Walt Disney Television and General Entertainment at The Walt Disney Co., takes over Oct. 26 to lead Netflix’s global content organization. The role spans scripted and unscripted series, film, and live events. Co-CEO Ted Sarandos described Rice as "one of the most effective at-scale operators in the entertainment industry."

Bajaria joined Netflix in 2016 and became chief content officer in 2023. Her tenure included hit shows such as Bridgerton and Squid Game, alongside partnerships with WWE and the NFL. Netflix and Bajaria did not immediately respond to requests for comment on the reason for her departure.

Layoffs come amid pressure for hits

On Wednesday, the company said it will cut roughly 6% of its workforce, its largest round of layoffs since 2022. The cuts primarily affect product, technology, legal, and human resources departments. Engagement has become investors' biggest concern, with YouTube and TikTok drawing viewers with free, user-generated content, giving them a cost advantage over Netflix. In July, YouTube captured 14.2% of U.S. TV viewing, while Netflix’s share was under 8%.

Analysts call for breakout hit

Rich Greenfield, co-founder of LightShed Partners, told CNBC that Netflix needs a breakout success similar to Squid Game to reignite growth. He noted that roughly two years have passed without the type of breakout content needed to materially improve engagement. Greenfield identified Netflix’s move into the creator economy, including video podcasts and courting YouTube talent, as a key potential growth driver. However, he emphasized that talent matters and that many of these deals have not yet launched, leaving their impact for next year.

Greenfield also highlighted that Netflix faces broader competition beyond streaming rivals. Investors are increasingly focused on technology companies and AI products, making it harder for traditional media stocks to attract attention. He argued that cost reductions alone are insufficient; Netflix requires a clearly differentiated growth strategy.

Earnings next week

Netflix reports third-quarter results after the market closes Oct. 20. Analysts expect earnings of 82 cents a share and revenue of $12.88 billion. On Thursday, shares closed 2.89% higher at $72.61 and fell 1.13% in extended trading to $71.79. The stock has fallen 20.20% this year and 39.66% over the past 12 months. In premarket trading on Friday, shares were down 3.87% at $69.80.

What the numbers show

The timing of the executive change coincides with significant operational adjustments. Netflix is cutting 6% of its staff while facing competitive pressure from platforms like YouTube, which held 14.2% of U.S. TV viewing in July compared to Netflix's sub-8% share. The stock's 20.20% decline year-to-date reflects market sensitivity to these engagement metrics and restructuring efforts ahead of Q3 earnings. Analysts note that despite initiatives in live TV and creator partnerships, the absence of a major breakout hit since Squid Game remains a critical hurdle for reversing slowing momentum.