Rosenblatt downgraded Netflix (NASDAQ: NFLX) to Neutral from Buy and reduced its price target to $105 from $152, saying the company's unexpected agreement to acquire Warner Bros.' studios and HBO businesses created a prolonged period of uncertainty with limited near-term financial benefits.
The analyst said Netflix's surprise announcement on Friday—an $83 billion enterprise-value agreement and $72 billion equity-value deal—introduced significant strategic and execution risks. Rosenblatt argued that the transaction appeared unlikely to be justified by financial returns on invested capital, suggesting that Netflix was instead relying on broad, unspecified assumptions about leveraging Warner Bros.' content library.
Given the heightened uncertainty, the firm applied a more conservative valuation multiple, using 25x enterprise value to 2026 estimated EBITDA, which drove the price target down by $47 to $105. Rosenblatt said the risk-reward profile no longer supported a bullish stance, prompting the rating cut from Buy to Neutral.
