Jefferies analysts James Heaney and Jesse Chao say Netflix’s financial outlook looks sustainable following the company’s decision to abandon its bid for Warner Bros. Discovery. In a research note, the pair outlined reasons they remain constructive on Netflix’s organic growth and reiterated a bullish view on the company’s ability to expand both revenue and earnings per share.
Topline growth and profitability outlook
The analysts’ work points to a roughly 10% expansion in revenue and a 20% compound annual growth rate for per-share income. Those projections underpin Jefferies’ constructive stance on Netflix’s core business metrics, which the analysts argue are showing resilience even as management stepped back from a high-profile potential acquisition.
Engagement and subscriber metrics
Jefferies pushed back on investor concerns that hours watched per subscriber are falling to an alarming degree. The analysts described such worries as "overstated," noting that Netflix’s churn and quarterly net additions remain "best-in-class, indicating no underlying deterioration in demand or retention." They view recent growth figures, including net additions in 2025 of roughly 23 million, as "solid" given simultaneous price increases and the waning of paid-sharing tailwinds.
On penetration, Jefferies points out that Netflix still sits below 50% of global connected TV households. Using that base, they estimate the service could reach about 410 million subscribers by 2030 "simply participating in [the connected TV industry] household growth," implying a durable runway for top-line expansion tied to broader device penetration trends.
Pricing power and advertising
The analysts say Netflix has kept its status as an essential service akin to a utility, a positioning that supports increased pricing power. At the same time, Jefferies sees the company’s advertising business approaching an "inflection" point, which could contribute materially to revenue mix and margins if monetization scales as expected.
Artificial intelligence and competitive dynamics
Jefferies also addressed concerns that artificial intelligence might trigger a surge of new competition. The analysts judged those fears to be "overstated," arguing that AI can act to reduce content costs and improve profit margins. They added that the risk of premium content migrating en masse to user-generated platforms or rivals duplicating Netflix’s distribution is "limited." As they wrote, "Even in an agentic UI world, fragmented rights and exclusive inventory make Netflix a required endpoint."
Context on the Warner Bros. bid
The Jefferies commentary arrived after Netflix walked away from its pursuit of Warner Bros., a decision that appears to leave Paramount Skydance as the likely buyer in that corporate contest. Netflix executives said the potential deal was "always a 'nice to have' at the right price," but "not a 'must have' at any price." Shares of the streaming service rose in premarket U.S. trading on the news.
According to the note, some shareholders had questioned whether acquiring a legacy media company would be justifiable. The decision to step back followed a development in which the board of the HBO Max parent assessed Paramount’s $31-per-share proposal as superior to Netflix’s offer. Netflix had been given four days to respond but opted not to raise its $27.75-per-share proposal for Warner Bros.' studios and HBO Max.
Conclusion
Jefferies’ assessment frames Netflix as a streaming leader with multiple levers for growth - subscription expansion tied to connected TV penetration, pricing power supported by a must-have positioning, and an emerging advertising revenue opportunity. While the company chose not to pursue a costly acquisition, the analysts signal confidence that organic drivers and operational improvements can sustain revenue and earnings momentum.