Netflix, Inc. (NASDAQ:NFLX) stock was little changed on Friday following yet another price target increase. It seems investors are getting used to hearing the broken record when it comes to analyst commentary on Netflix stock. Still, it seems as if NFLX has risen so far so fast that a few analysts are starting to pause.
Netflix stock price target to $350
In a note to investors on Friday, RBC Capital Markets analyst Mark Mahaney said he raised his price target for Netflix stock to $350 per share and reiterated his Outperform rating. He cited his recent surveys of users in the U.S. and Japan and positive data from Google Trends regarding Netflix searches throughout Asia. In fact, he feels that 2017 was the streaming firm’s breakout year in Asia.
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Mahaney’s U.S. survey covered more than 1,500 households and found that penetration is at a record high at 60% of respondents, compared to 56% in the November survey. He also found that Netflix had a “significant” lead over both Amazon and YouTube. U.S. subscribers are also quite satisfied with the streaming service, as 69% are either “extremely” or “very” satisfied, an increase from 67% in November.
He also found that the churn rate remains low, as 88% of subscribers say they’re either “not at all” or “slightly” likely to cancel within the next three months. That’s roughly flat with what his survey found in previous quarters. The price increase isn’t scaring off U.S. subscribers either, he said, as 74% said the recent price increase made them “not at all” or only “slightly” likely to cancel. Additionally, he said 54% of U.S. subscribers think the content available on Netflix has “improved,” while just 9% believe it has “worsened.”
Netflix gains traction in Asia
The RBC team also found signs that Netflix is finally picking up steam in Japan and the rest of Asia. According to Mahaney, Japanese consumers are finally starting to show that they’re willing to pay for streaming as a record high 31% describe themselves as “extremely,” “very” or “moderately” likely to pay for it. Additionally, 5% of those surveyed in Japan were using Netflix, compared to 3% a year ago, and 63% of Japanese subscribers are “extremely” or “very” satisfied.
Looking beyond Japan, he also reports that Google Trends data for Netflix remains strong, looking across South Korea, Singapore, India, Thailand, Pakistan, Indonesia, Vietnam and Bangladesh. He describes the results from his search as “very positive, showing consistent upwards trends” over last year and into this year.
Mahaney expects Netflix stock to rise to between $350 and $360 per share within the next three years, based on the results of his surveys.
Loop Capital: buy Walt Disney instead
Netflix stock has begun to receive a few downgrades from some analysts due to valuation. Loop Capital analyst Alan Gould initiated coverage of NFLX with a $325 price target and a Hold rating, saying that the rally has simply gone too far. Although he likes the company for the lead it has built in internet TV, he doesn’t like the valuation. Instead of NFLX, he likes Walt Disney Co (NYSE:DIS), which he rates at Buy with a $130 price target.
Netflix stock slipped by less than 1% in intraday trading on Friday, falling as low as $318.37. DIS was also down less than 1%, falling as low as $103.08 per share.