Netflix Inc. (NFLX) reports its fourth-quarter results on January 20, and while the fundamentals look solid, there's a valuation headache that won't go away.

Wedbush analyst Alicia Reese expects the streaming giant to deliver revenues of $11.96 billion, just a hair below the consensus estimate of $11.97 billion. Earnings should land right at expectations of 55 cents per share. Nothing dramatic, but steady progress.

Reese maintained an Outperform rating on the stock but slashed her price target from $150 down to $115. The reason? What she calls "the ongoing overhang from pending M&A." Translation: uncertainty around potential deals is making investors nervous, and that's weighing on the stock regardless of how well the business is actually performing.

Here's what's working for Netflix: the company's churn rates remain impressively low, which matters especially to advertisers who want stable, engaged audiences. The variety and depth of Netflix's content library keeps people subscribed, and that stickiness is translating into real business value.

The company is also seeing steady subscriber growth and rising average revenue per membership, driven by price increases and its expanding advertising tier. Reese's quarterly survey data suggests solid Q4 performance with momentum building into the first quarter of 2026, when she expects a meaningful uptick in new and returning subscribers.

As for the stock itself, Netflix shares were trading up 1.02% at $89.44 on Thursday. With a market cap of $379.44 billion and a P/E ratio around 37, the company commands a premium valuation that reflects growth expectations. But the stock's 52-week range of $82.11 to $134.11 tells a story of volatility, and with shares trading near the lower end of that range, there's clearly some investor caution despite the operational momentum.