Media

Why Almost Every Analyst Is Chasing Netflix Higher

Netflix Inc. (NASDAQ: NFLX) just went into overdrive after earnings, with its stock hitting new all-time highs. The streaming movie and content giant is now approaching a market cap of $50 billion, and the recent stock split has taken effect. With a subscriber count that blew out the estimates, it looks as though every analyst under the sun is chasing their Netflix price target higher.

24/7 Wall St. would point out that some contrarian investors might be looking the other way. Sure, they would have to be brave contrarians, but even Reed Hastings has been somewhat mystified by share prices and has maintained the line that Netflix just wants to dominate in content that subscribers want to watch.

Netflix ended its last quarter with 65.55 million members, up from 62.27 million in the previous quarter and 50.05 million a year ago. If the same trajectory continues, then Netflix could have 100 million subscribers in less than three years.

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So, which analysts have raised their ratings or targets? Outside of simply saying “all of them,” we wanted to note that covering every call here would require an eight-page tome. That being said, 24/7 Wall St. is highlighting the more aggressive calls it has seen so far on Thursday, knowing that the consensus price target does not yet reflect all the analyst price target hikes.

Bank of America Merrill Lynch reiterated its Buy rating and raised its target to $121 from $103. The firm’s Nat Schindler and Justin Post said that Netflix’s original content was driving its additional subscriber gains above expectations, and they expect that trend to continue. It was noted that there will be $5 billion in content spending in 2016. They also see third-quarter guidance as guidance with higher average revenue per user.

Canaccord Genuity’s Gregory Miller reiterated a Buy rating and raised the target price to $120 from $80. Miller believes Netflix is at an inflection point where new original content and new countries being launched will add subscribers at a rate that the additional cost pressures and near-term margin compression will take a back seat.

Credit Suisse’s Stephen Ju has a Neutral rating, but the firm raised its target to $110 from $100 in its call. The firm said this was another well-executed quarter with subscribers, revenue, contribution profit dollars and margin exceeding its estimates for both domestic and the international streaming businesses.

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