KeyBanc reduced its price target on Netflix (NFLX) to $1,000 from $1,100, but the bank kept an Overweight rating on the name.

Why KeyBanc Remains Bullish on NFLX

During the current macro economic environment, the bank prefers companies with subscription business models over those that primarily rely on advertising. Of course, NFLX is in the former category.

A home theater with family members enjoying streaming content together.

Moreover, KeyBanc believes that NFLX can grow significantly over the longer term, as it continues to gain market share at the expense of legacy media.

Also importantly, NFLX's profits can increase meaningfully, and the firm remains relatively strong compared to other media companies, according to KeyBanc.

Why KeyBanc Cut Its Price Target on NFLX

Citing its belief that Netflix's ad growth will decelerate going forward, while the company will find it harder to raise prices, the bank lowered its estimates for the company. Additionally, KeyBanc reduced its expected price-to-earnings multiple for the shares.

The Recent Price Action of NFLX Stock

In the last month, the shares are little changed, while they have risen 5% in the last three months.

While we acknowledge the potential of NFLX, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than NFLX but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.