HSBC initiated coverage of Netflix with a Buy rating and a $107 price target, suggesting the stock's recent decline offers a compelling entry point. Analyst Mohammed Khallouf argues shares trade 33% below their summer 2025 peak despite a strengthening earnings profile. The bank's valuation model applies a 34x multiple to 2026 estimates, implying 18% upside.

The bullish call directly addresses Netflix's pending $83 billion bid for Warner Bros. Discovery. HSBC believes the deal signals industry maturation, noting domestic subscriber saturation and intensifying competition from user-generated video like YouTube.

While the environment is tougher, the analysts see the merger as strategically sound. They estimate a combined entity could boost 2028-29 earnings by 2-4%, with further upside from bundling HBO content. Despite market headwinds, HSBC maintains Netflix's fundamental outlook is sturdy.