Netflix: A Second Monetization Cycle Is Just Getting Started

I initiate coverage of Netflix with a Buy rating and a $134 price target, emphasizing its transition into a second monetization cycle. NFLX's 2026 guidance targets $51–51.4B revenue, 31.5% operating margin, $3B advertising revenue, and $12.5B FCF, supporting robust operating income growth. Despite premium P/E and EV/EBITDA multiples, the company's PEG ratio and 24%+ EPS growth justify valuation relative to slower-growing sector peers. The main risks are slower subscription and advertising growth, expensive live content rights, and weaker-than-expected margin expansion.