Netflix Shares Face Diverging Analyst Views Amid Major Acquisition Scrutiny

Netflix stock is trading near its annual low, with market experts presenting sharply contrasting outlooks. The divergence in opinion centers on the streaming giant's planned multi-billion dollar acquisition of Warner Bros. Discovery, a move seen as both a significant opportunity and a substantial risk.

Closing at $85.51 on Tuesday, the equity sits well below its 52-week high of over $134. Freedom Capital Markets views the current valuation as attractive, upgrading its rating to "Buy" with a new price target of $104. The firm cites a solid operational trajectory, pointing to Netflix's strong subscriber and advertising business growth in the fourth quarter of 2025. For the full year 2025, the company reported a 16 percent increase in revenue.

In a contrasting move, analysts at LBBW adopted a more cautious stance. They downgraded the stock to "Hold" and reduced their price target to $94. Their skepticism is primarily driven by the proposed Warner Bros. Discovery deal, highlighting increased balance sheet risks and potential regulatory hurdles from competition authorities.

Regulatory Spotlight on Warner Bros. Discovery Bid

The bidding contest for Warner Bros. Discovery (WBD) saw a pivotal development in early January. WBD's board of directors rejected a competing takeover offer from Paramount Skydance valued at $108.4 billion. Instead, the board reaffirmed its support for the existing agreement with Netflix, which involves a pure cash price of $83 billion. According to the board, this arrangement offers greater certainty of completion and represents a better strategic fit.

Should investors sell immediately? Or is it worth buying Netflix?

This planned merger is now undergoing intense scrutiny from policymakers and antitrust regulators. The issue has gained focus in Washington, D.C., where the US Senate antitrust subcommittee has scheduled a hearing for February 3rd. The session will examine the competitive implications of combining Netflix's vast subscriber base with Warner's extensive content library.

Strategic Content Partnership with Sony

Alongside its merger plans, Netflix continues to expand its content portfolio independently. On January 15, the company announced a global Pay-1 licensing agreement with Sony Pictures. This exclusive, multi-year deal grants Netflix worldwide rights to major Sony theatrical releases following their cinema and home entertainment windows. Industry observers estimate the value of the agreement at over $7 billion. This secures a predictable pipeline of premium content for Netflix, serving as a strategic buffer should the Warner acquisition face delays or fail to materialize.

Key Data Points

• Previous Close: $85.51
• Recent Analyst Actions: Freedom Capital Markets (Upgraded to "Buy," Target $104); LBBW (Downgraded to "Hold," Target $94)
• Consensus Price Target: Approximately $116 (average of recent estimates)
• Next Key Event: US Senate antitrust subcommittee hearing on February 3
• Q4 2025 Revenue: ~$12.05 billion; EPS: $0.56

Near-Term Catalysts and Outlook

The stock's trajectory in the coming weeks is likely to be shaped by two key factors: the political and regulatory response to the proposed Warner acquisition, and Netflix's ability to maintain its growth momentum in subscribers and advertising. A critical milestone will be the early February hearing in Washington, which should provide initial clues regarding regulators' stance on the mega-deal.