Buy and Hold Netflix to Enhance Your Portfolio Amid Ongoing Volatility

Global streaming giant Netflix Inc. NFLX has become a new icon for defensive picks by investors amid the Trump administration’s tariff-led severe volatility on Wall Street. In the recently reported first-quarter 2025 results, NFLX handsomely beat the Zacks Consensus Estimate for bottom line while the top line was mostly in line with the consensus mark. Despite trade and tariff-related doldrums, NFLX seems to have maintained healthy engagement levels staying ahead of its closest rival The Walt Disney Co. DIS. What is more, the company reaffirmed its 2025 guidance irrespective of the possibility of a near-term recession.Netflix currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. At this stage, it will be prudent to buy this stock and hold for the long term as the company’s strong execution of the last few quarters and robust future projections will generate more value. Consequently, the stock price should witness an attractive upside. The chart below shows the price performance of NFLX year to date.Image Source: Zacks Investment ResearchExcellent Estimate Revisions for NetflixWe have seen positive revenues and earnings estimate revisions for Netflix by market participants after the release of first-quarter 2025 financial numbers. For second-quarter 2025, the Zacks Consensus Estimate currently shows revenues of $11.05 billion, suggesting an improvement of 15.6% year over year and earnings per share of $6.96, indicating an increase of 42.6% year over year. The company pulled off positive earnings surprises in the last four reported quarters delivering an average beat of 6.9%.   Moreover, NFLX has witnessed positive earnings estimate revisions (+3.1%) for 2025 in the last seven days. At present, the Zacks Consensus Estimate indicates a year-over-year increase of 13.9% and 27.3%, respectively, for revenues and EPS in 2025. The current Zacks Consensus Estimate for 2026 revenues and EPS reflects an upside of 11.6% and 20.3%, respectively.Image Source: Zacks Investment ResearchVisibility Remains HighThe primary reason for positive revenue and earnings estimates revisions by brokerage firms is the strong visibility of NFLX’s business. On April 1, Netflix launched its Ad Suite in the United States. The company will ramp up this Ad Suite in international markets in the ensuing second quarter. The ad-supported offerings will enable management to witness impressive subscribers and ARPU (average revenue per user) growth. Buoyed by its scalable ad business, NFLX is expected to leverage its own proprietary ad system, doling away with Microsoft Corp. MSFT as its ad-tech partner. The company’s policies of offering ad-supported lower-prices tier, abolishing password sharing and effective price increase, should help it to become a defensive play ahead of a possible economic downturn. Furthermore, Netflix uses artificial intelligence (AI), data science and machine language (ML) extensively to provide consumers with more appropriate and intuitive suggestions. Netflix's AI platform takes into account an individual’s viewing habits and hobbies and accordingly provides recommendations. NFLX’s AI model compiles subscriber information and recommends content based on their preferences, which can be customized by end users. AI applications enable NFLX to offer high-quality streaming service at reduced bandwidths.  Attractive Valuation of NFLX SharesOn Feb 14, the stock price touched its all-time high of $1,064.5. Thereafter, it fell to $821.1 on April 7, due to the tariff-related mayhem on Wall Street. Despite facing severe volatility, shares of Netflix are up 17.8% year to date, while the broad-market index — the S&P 500 Index — is down 8.4%.Netflix has a long-term (3-5 years) growth rate of 20.4%, well above the growth rate of 12.6% of Wall Street’s benchmark — the S&P 500 Index. The company has a return on equity (ROE) of 39.6% compared with the S&P 500’s ROE of 17% and the industry’s ROE of 6.2%. NFLX has a current net margin of 23.07% compared with the S&P 500’s net margin of 12.7%.Image Source: Zacks Investment ResearchZacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Microsoft Corporation (MSFT): Free Stock Analysis Report Netflix, Inc. (NFLX): Free Stock Analysis Report The Walt Disney Company (DIS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks