Ads are adding up for Netflix Inc. in a lucrative way.

When the video-streaming giant
NFLX,
-0.19%

reports quarterly results on Jan. 23, advertising will dominate the narrative.

The rip-roaring success of Netflix’s new advertising-supported service has already led Oppenheimer analysts to jack up their price target for the stock to $600, the highest among Wall Street analysts.

Read more: Netflix buoyed by record stock-price target of $600 on high hopes for ad-supported tier

The pace of growth “suggests plenty of room for [subscription] growth in 2024,” Oppenheimer analyst Jason Helfstein said in a note Jan. 12. He raised his fourth-quarter estimates for net additions to more than 10 million from 9 million, and for 2024 additions to more than 24 million from 21 million-plus.

At the same time, Wells Fargo analysts increased their estimate on Netflix net additions to 10.4 million from 9.5 million, based on internal research.

And on Wednesday, BofA Securities analyst Jessica Reif Ehrlich raised her price target on Netflix’s stock to $585 from $525 and kept her buy rating. KeyBanc Capital Markets analyst Justin Patterson increased his price target to $545 from $525 and maintained his overweight rating.

“Netflix has won the ‘streaming wars,’” Reif Ehrlich wrote in a note. 

Shares of Netflix were flat, at $480.33, in trading Wednesday.

Rosy outlooks from Wall Street are being fueled by a digital ad market that “appears to be holding up relatively well as we exit 2023 and enter 2024,” Piper Sandler analyst Matt Farrell wrote Tuesday. “Our digital ad expert sees [fourth-quarter] digital ad market growth of 8.7%, with an acceleration through the end of the quarter.”

Netflix’s pivot to advertising and a crackdown on shared accounts has boosted the company’s bottom line and enabled it to add subscribers.

Netflix, with 247 million subscribers, picked up 10 million last year. In November, the service accounted for 7.4% of television viewing time in the U.S., topped only by Alphabet Inc.’s
GOOGL,
-0.72%

GOOG,
-0.83%

YouTube at 9% and far outpacing Amazon.com Inc.’s
AMZN,
-0.95%

Prime Video at 3.4% and Walt Disney Co.
DIS,
-2.91%

at 1.9%, according to Nielsen.

Prime Video, Netflix and Hulu remain the “stickiest” of streaming services for consumers as the average number of subscriptions per person declines: It slipped to 4.4 services in the fourth quarter of 2023 from 4.8 a year earlier, according to J.P. Morgan’s fourth-quarter survey of 1,055 U.S. adults.

Of those who shared Netflix accounts, 62% said they will either get their own subscription (51%) or become an extra member (11%), the survey found.

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