02:02 PM EDT, 10/18/2024 (MT Newswires) -- Netflix's ( NFLX ) ability to leverage content spending is "impressive" and should help it gain further competitive edge, Wedbush Securities said Friday.

Late Thursday, the streaming giant reported higher-than-expected third-quarter results as its new subscriber count surpassed Wall Street's estimates. The company expects fourth-quarter revenue to grow 15% year over year, with net subscriber additions seen higher sequentially due to seasonality and a strong content slate. Netflix ( NFLX ) projects revenue to grow 15% this year and 11% to 13% in 2025.

The company's 2025 content slate includes new seasons of "Wednesday," "Squid Game" and "Stranger Things," as well as new shows from Shonda Rhimes and Ryan Murphy, Netflix ( NFLX ) co-Chief Executive Ted Sarandos said on an earnings conference call late Thursday, according to a Capital IQ transcript. "We could not be more excited about where we sit right now and where we're heading."

"Perhaps most impressive is the company's ability to leverage content spend," Wedbush analysts, including Alicia Reese, said in a note to clients. The company's 2025 growth will likely be led by "a more robust" content slate than seen this year, which was affected by Screen Actors Guild - American Federation of Television and Radio Artists strikes late last year, according to the note.

"We think Netflix ( NFLX ) can maintain high-quality production given its healthy cash position against competitors who have to tread more carefully to achieve or maintain some level of profitability," the analysts said. "Netflix ( NFLX ) can spend substantially more on content -- likely growing on its $17 billion content spend in 2024 -- against the backdrop of less competition than it saw pre-strike."

Wedbush raised its price target on the Netflix ( NFLX ) stock to $800 from $775 while reiterating its outperform rating. The company's shares were up 10% in Friday afternoon trade and have gained roughly 55% in value so far in 2024.

The company's subscriber base provides it an advantage as it can "justify investment" in content that appeals to 10% of its audience, amounting to roughly 300 million households, the brokerage said.

"As Netflix ( NFLX ) inevitably slows the rate of content spending growth to a level well below its rate of revenue growth, its new revenues are likely to contribute operating margins of 50% or more, driving overall operating margins well above 30% and resulting in dramatic free cash flow growth," the analysts wrote.

Netflix ( NFLX ) expects its 2025 advertisement revenue to almost double year over year, "albeit off a small base," co-CEO Greg Peters said on the call. "Just as a confidence point in that, this year's US upfront, we're seeing... over 150% increase in our ads sales commitments," Peters added.

The company is likely set to accelerate its ad-tier revenue contribution for the next several years amid improvements in its advertising offerings and targeting, as well as through new partnerships and more live events, Wedbush said. "With this setup, the ad-tier should become the primary growth driver in 2026."

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