Netflix, Inc. (NASDAQ:NFLX) released its latest earnings report last night, and Jefferies analysts still aren’t convinced that the company is worth as much as its shares are trading at. They continue to rate the company at Underperform, although they increased their price target from $300 to $350 per share. They cited $300 for improving average revenue per user and long-term growth in international subscribers.

Netflix

How Netflix stacked up

In a report dated July 22, 2014, analysts Brian Fitzgerald and Brian Pitz and their team note that Netflix is still improving its margins in markets around the globe. The company’s revenue increased 25% year over year, which is its fastest growth at the top line since the fourth quarter of 2011. Revenue came in at $1.34 billion, beating Wall Street’s estimate at $1.33 billion. Netflix’s earnings of $1.15per share was ahead of their estimate at $1.13 per share and Wall Street’s estimate of $1.14 per share.

Netflix ended the June quarter with 36.2 million subscribers in the U.S., which was slightly lower than their estimate of 36.3 million. U.S. revenue was $838 million, again missing their estimate of $841 million. However, the contribution market rose to 27.1%.

Internationally, Netflix had 13.8 million subscribers at the end of the quarter, which was slightly ahead of their estimate of 13.6 million subscribers. International revenue was $307 million, reflecting an 85% growth rate and higher than their estimate of $305 million. The international contribution market increased from -%39.7% in the same quarter a year ago to -5% in the June quarter of this year.

Netflix plans aggressive expansion

Because of the significant improvement in margin improvement internationally, Netflix feels confident to rapidly expand its European operations. The company is planning to launch in six new countries in September: Germany, Austria, France, Belgium, Luxembourg and Switzerland. Together, the six markets have 60 million households, which increases Netflix’s international addressable market to 180 million households, which twice that of the U.S. It will be the biggest expansion since Netflix moved into Latin America and the Caribbean in September 2011.

Netflix spends on content

The Jefferies team thinks Netflix might eventually cut its 2015 guidance for a 400 basis point year over year increase in margins as it expands. The company’s management did say that they’re looking at three other possibilities other than an improvement of 400 basis points. They’re also considering improvements of 100, 200 and 300 basis points. The Jefferies analysts say the wild card in this decision will be how much the company spends on new and original content.

They note that Netflix has continued its heavy investments into original content as its shows received more Emmy nominations—31 this year, compared to 14 last year.