A pair of Netflix Inc (NASDAQ:NFLX) analysts are out with positive updates ahead of the entertainment giant's earnings report next week. The calls focused on valuation, with one analyst being notably more optimistic than the other.

What To Know: Goldman Sachs analyst Eric Sheridan maintained a neutral rating on Netflix on Monday and raised the price target from $659 to $705 ahead of earnings next week.

Sheridan remains positive on Netflix, but continued stock outperformance has raised valuation questions. Netflix has significantly outperformed the S&P 500 over the past year, up 87% versus 27% for the broader market, he said in a new note to clients.

The Goldman analyst noted that much of the outperformance is warranted given that the company remains the market leader in streaming, has made further progress on its ad-supported tier and has seen competition continue to moderate as other streaming players focus on profits over growth.

Sheridan highlighted recent third-party data showing that Netflix maintains a strong market leader position, giving the company pricing power and lower competitive intensity.

"Our Neutral rating is a factor of stock performance (NFLX shares +45% vs the SPX +20% YTD) and the forward multiple to growth already reflecting a host of positive operating cadence in 2025 and 2026 at current levels," the Goldman Sachs analyst said.

Sheridan is positive on Netflix, but he's hung up on valuation. That's where Piper Sandler, who also released a new note on Netflix on Monday, differs.

"Notably, our prior Neutral stance was centered around valuation, but now, we appreciate the company is expensive for a reason," Piper Sandler analyst Matt Farrell said in a new note.

Piper Sandler upgraded Netflix from Neutral to Overweight and raised the price target from $650 to $800 to reflect the company's clear leadership in the streaming space.

Farrell believes positive earnings revisions could be on the horizon as Netflix's ad-tier business has been de-risked. The analyst also said the company still has levers it can pull in its ads-free business, particularly around pricing. He further noted that consensus estimates for margins could prove to be conservative.

Netflix is due to report third-quarter financial results after the market close on Oct. 17. The company is expected to report earnings of $5.11 per share on revenue of $9.762 billion, according to estimates from Benzinga Pro.

The Piper Sandler analyst highlighted recent channel checks showing that streaming now represents about 41% of all television viewing in the U.S. According to Farrell, Netflix has about 20% share of streaming viewership and about 8% share of overall television viewing.

"As the pivot to streaming continues, we expect the company to maintain its leadership position, particularly as it adds more and more live content," the analyst said.

NFLX Price Action: Netflix shares were down 1.76% at $707.00 at the time of publication Monday, according to Benzinga Pro.

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