11:31 AM EDT, 03/27/2024 (MT Newswires) -- Netflix ( NFLX ) is expected to generate increasing free cash flow and expand profitability, meeting expectations for its earnings per share to more than double between 2023 and 2026, Wedbush said in a note Wednesday.

The investment firm said it's removing the streaming giant from its Best Ideas List after "a year of significant growth," adding that some of the major catalysts for its inclusion in the list have been priced in, including benefits from the password-sharing crackdown and reduced churn with the introduction of its advertising-supported tier.

Wedbush said its quarterly survey showed net subscriber additions, with a seasonal deceleration in subscribers that still likely increased year over year and an expansion of ad tier subscribers.

"As long as global trends remain consistent and the ad market continues to improve this year, we expect Netflix ( NFLX ) to continue to report strong results," Wedbush said, adding the company's ad tier is expected to continue to limit churn and expand advertising revenue in 2024 and beyond.

Other catalysts will now be the "full digestion of the advertising potential of WWE in 2025 and beyond" as well as "gaming expansion into more licensed IP, and growth in viewership (leading to accretion) on the ad tier," Wedbush said.

Analysts said Netflix ( NFLX ) has reached the right formula with global content creation, balancing costs, and increasing profitability.

Wedbush raised its price target on the stock to $725 from $615 and kept the outperform rating.

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