Netflix is a “top pick” for next year, according to Evercore ISI, despite the streaming giant reportedly missing ad revenue targets. Netflix shares closed lower by over 8% on Thursday following a Digiday report that the company offered to return money to advertisers for missing viewership targets. Mark Mahaney, head of internet research at Evercore ISI, brushed aside the concerns, however, saying the long-term outlook for the company remained positive. “All we’ve learned is that this company over-forecast in its first quarter how well they could do. I chalked it up to growing pains,” Mahaney told Squawk Box Asia on Friday. “I still like this stock. It’s one of my top picks for next year.” Evercore ISI expects shares of Netflix to rise by more than 17% to $340 a share over the next 12 months. Meanwhile, according to FactSet data, the median price target of 40 analysts that cover the stock shows a 7.6% upside from the current share price of around $290. Netflix shares have fallen more than 51% this year. Mahaney said the likely global recession would also prove to be an opportunity for Netflix to expand its subscriber base. He argued that consumers are likely to spend on entertainment despite a downturn — but do it cheaply. “I think it’s extraordinarily cheap for the value proposition. There is an economic risk [but] I just think they pretty well hedged it with these price points,” he said. Netflix is priced lower than most of its competitors in the United States, with its most basic plan starting at $6.99 a month. Disney Plus is offered at $7.99, while Amazon Prime Video begins at $8.99. Paramount+ and NBC Universal (CNBC parent) owned Peacock TV are the only major streaming services available at the lower price of $4.99/month. Mahaney, senior managing director at Evercore, also said Netflix’s cheapest ad-supported plan would drive growth in subscriber numbers, with the potential for higher income in the future when customers upgraded their plans. “I think they’ll be able to grow their subscribers better, and then they’ll get advertising revenue on top of that. So to me, the eye on the price is the subscriber growth more than the dollar amount they get on advertising,” he said. Mahaney also pointed to competitors making changes to their strategies, such as cutting spending on streaming services, that would indirectly benefit Netflix in the long term. He said Disney’s decision last month to let go of then-chief executive Bob Chapek was partly for running operating losses at a “heavy” rate at Disney Plus, a direct competitor of Netflix. “I think you’ll see more of that. I think that benefits the incumbent, which is Netflix,” Mahaney added.