Netflix, Inc. (NASDAQ:NFLX)’s price target has been raised from $285 to $370 by MKM Partners as they feel investors have growing confidence in the size of opportunity, and the expertise of the management. MKM Partners analyst Rob Sanderson believes that Netflix will continue to be the prime beneficiary of the shift in video entertainment, which is more inclined towards Internet-delivered services. The size of the video market in the United States is $200 billion.
UK a big opportunity for Netflix
In the United Kingdom, Netflix, Inc. (NASDAQ:NFLX) is turning into a must-have service for every household. Netflix faces stiff competition in UK and does not get the first mover advantage here. Analyst Rob Sanderson feels that the subscriber base here will be larger than that back home in the United States.
MKM analyst does not expect the price increase to come anytime soon and feels that management will keep the price down to trigger mass penetration before considering pricing power/pricing tiers.
Potential risks to Netflix
Further, Netflix, Inc. (NASDAQ:NFLX) has been assigned the target price of $370 over the next 12 months with a Buy rating, which can be subjected to risks like the streaming company losing money to develop international markets as it is strict on content, decline in the growth rate of subscribers, stagnant international markets, greater threat from competition and probable new entrants, lack of network neutrality or aggressive usage caps could introduce higher delivery costs.
Rating from other analysts
Apart from MKM Partners, other research firms also assigned ratings to Netflix. Analysts from the Street maintained a Hold rating on the stock in a research note published to investors on September 27. Albert Fried & Company increased the price target on shares from $80.00 to $122.00 and assigned an Underweight rating to the stock in a note issued on September 22. Separately, CRT Capital analysts started coverage on Netflix stocks and have assigned “fair value” to the stock in a note released on September 19.
Netflix currently has an average rating of Hold and a consensus target price of $233.36.
For the fourth quarter, Earnings for Netflix, Inc. (NASDAQ:NFLX) came in at $0.49 per share ahead of the analyst estimates of $0.40 by $0.09. Revenue was posted at $1.07 billion for the quarter, compared to the consensus estimate of $1.07 billion. In the corresponding quarter of the previous year, Netflix posted a loss of $0.11 per share. For 2014, analysts are looking forward for EPS of $1.49 per share.