Netflix, Inc. (NASDAQ:NFLX) has been keeping investors extremely happy with each earnings report, posting more and more growth, but can the company keep it up? Bernstein analysts note that there are three different bull cases for the company right now, one of which focuses on the international opportunity. But is this a valid bull case? Carlos Kirjner and his team have taken a closer look at the potential opportunities Netflix might have in various international markets.

netflix Inc. (NFLX)

Netflix faces limited prospects in Latin America

The Bernstein team believes that so far, Netflix, Inc. (NASDAQ:NFLX) has made good progress in the U.K. and Canada but that its success in Latin America has been limited. They’re estimating that the company has approximately 4.2 million subscribers in the U.K. and Ireland, which is about 14% of total households. They estimate that the company as 3.5 million subscribers in Canada, which is 25% of total households.

They note that Netflix, Inc. (NASDAQ:NFLX) moved into Latin America in 2011 but that the company probably still faces limitations in infrastructure and income. They believe the opportunity for Netflix in the region is probably limited because of infrastructure and affordability there.

How big could Netflix’s international market get?

The Bernstein team said if Netflix, Inc. (NASDAQ:NFLX) adds 17 more countries over the next two or three years, it could have an addressable international market of 243 million. They include households with fixed Internet connections which can support streaming video on demand.

In terms of penetration, they note that it will differ quite a bit across the various parts of the world, just as penetration of pay TV channels does. They believe that “end-state penetration” for streaming video on demand will be 129 million homes in all those markets, which would be almost 55% of the addressable homes, by 2023.

The Bernstein team estimates that Netflix, Inc. (NASDAQ:NFLX) will hit about 65 million international subscribers, which is about a 50% share of their estimated international streaming video on demand market. They note that Netflix isn’t the first entrant in most international markets and say that although it could become the biggest provider in some of those markets, they don’t see the company’s market share as ever being “even close” to its share of the U.S. market because of competition. In Europe, they’re estimating that Netflix will capture about a 50% share on average.

Netflix’s international opportunity valued at $140 a share

The analysts value the international opportunity for Netflix, Inc. (NASDAQ:NFLX) at $140 a share after a number of assumptions. They assume that the company is able to have an international contribution market of around 27%, which they say is generous, and reach a generous 65 million households by 2023. They also assume that the company sees annual revenue of $100 per household, which results in $1.8 billion EBITDA for 2023.

They continue to rate Netflix, Inc. (NASDAQ:NFLX) as Underperform, although they did raise their price target from $220 up to $260 a share. That still suggests significant downside from where the stock was trading on Friday, however.