Netflix (NFLX) is set to report its fiscal second quarter earnings on Thursday after market close — but the streamer will once again have a high bar to overcome as the stock flirts with record highs.

"For NFLX shares, much is priced in but we remain bullish given the still large opportunity for growth ahead," Morgan Stanley analyst Benjamin Swinburne wrote in a note ahead of the report.

Investors have praised the company's foray into sports and live events. Meanwhile, its ad tier continues to gain traction. Shares have soared as a result, with the stock up about 35% since the start of the year.

As of Thursday's close, Netflix was trading at around $656 a share. Shares closed at a record high of $691.69 on Nov. 17, 2021.

But the stock's recent run-up has led to some apprehension on Wall Street.

"We are cautious heading into the firm’s Q2 2024 release," Citi analyst Jason Bazinet wrote. "We maintain our Neutral rating and $660 target price."

Here's what Wall Street expects from the report, according to Bloomberg consensus estimates:

• Revenue: $9.53 billion (Netflix's guidance: $9.49 billion) vs. $8.19 billion in Q2 2023

• Earnings per share (EPS): $4.74 (Netflix's guidance: $4.68) vs. $3.29 in Q2 2023

• Net subscriber additions: 4.7 million vs. 5.9 million in Q2 2023

In May, Netflix announced it won the streaming rights to two NFL games set to air on Christmas Day as part of a three-season deal. The company also told advertisers at its May Upfront presentation that its ad tier has reached 40 million global monthly active users — a significant jump from the 15 million users the company revealed back in November and a 35 million-user increase compared to the year-ago period.

The growth comes as the streamer has raised the prices of its ad-free subscriptions in an attempt to lure more users to its ad-supported offering. Netflix's password-sharing crackdown has also lifted top-line growth and increased the platform's overall subscriber base, with another 9 million-plus users added in the first quarter.

But it hasn't been an entirely smooth trajectory upward. In April, Netflix said it would stop reporting subscriber figures at the start of next year, raising concerns about its long-term subscriber growth and sending shares tumbling.

Netflix also has "larger competitors to consider especially as its own business matures over the next few years," warned Swinburne. "The obvious examples are Alphabet's YouTube and Amazon's Prime Video. Perhaps less obvious are other sources of consumer time like social media, which is increasingly populated by short-form video."

"Finally, there is the long-term risk that as its own margins build through outsized returns, [a new army] or many may assemble," he said. "The potential for AI tools to dramatically reduce the barriers to entry in premium, professional video come to mind in this regard."

And although the ad tier has enjoyed early success, analysts have warned the initiative still has a long way to go. Bank of America analyst Jessica Reif Ehrlich said her team views advertising "as a longer-term story and [does] not expect a material revenue contribution until 2025."

She cited the glut of new inventory with the launch of several competitor ad-supported services, along with "the backdrop of a mixed advertising environment." Still, the analyst reiterated her Buy rating and increased her price target to $740 a share, up from the prior $700.

"We raise our target multiple to reflect continued momentum in the underlying business," she said. "Supported by its world-class brand, leading global subscriber base, position as an innovator and increased visibility in growth drivers, we believe that Netflix should continue to outperform."

Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at [email protected].

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