Netflix’s international subscribers are expected to have “2-3x faster profit trajectories” than the streaming firm’s U.S. subscribers, believes Needham & Co. analyst Laura Martin. The research firm reiterated its Buy rating on the U.S. firm and raised its price target from $600 to $780.

Netflix, Inc. Global Subs To Be More Profitable Than US [REPORT]

More monetization from global subscribers

“Offshore, we believe that NFLX’s international subscribers have 2-3x faster profit trajectories than in the US, suggesting higher ROICs, and therefore higher lifetime value per subscriber than US subscribers,” stated Martin. Netflix is buying content across the globe, which would help it in creating higher barriers to entry, and relatively lower costs compared to the competitors. Also the analyst believes that going forward, the streaming firm could add advertising revenue.

Martin provided no additional details on her profit model for Netflix but did share her estimates for this year. For the June quarter, Martin expects the streaming firm to have 21.5 million paying subscribers internationally contributing revenue of $472 million. The analyst estimates the cost of goods to be $425 million, marketing costs to be $146 million and a net loss of $98.8 million. For the domestic market, Martin estimates 41 million streaming subscribers bringing in $1.04 billion in revenue. The cost of goods sold is expected to be $632 million, marketing cost are projected to be $75 million and profits are estimated to be $336 million.

The bump in the price target from Martin is based on her 2016 estimates. The analyst expects Netflix to earn a net income $3.45 per share on revenue of $8.45 billion compared to the consensus estimate of $8.42 billion and $3.38.

Alibaba may not impact Netflix much

On news of Alibaba coming up with a streaming service, Martin said that the U.S. firm may face problems. However, the analyst noted that her valuation does not consider China, and Alibaba’s service would have no impact on Netflix services in other parts of the world.

Following the news of the Chinese e-commerce giant planning a pay-to-watch video subscription service, shares of Netflix dropped. The president of Alibaba’s digital entertainment arm said the company is trying to follow Netflix and Time Warner’s HBO unit.

In the last two months, shares of the streaming firm gained almost 50%. On Tuesday, Netflix shares closed up 1.97% at $666.91, and year to date, the stock is up by over 94%.