Netflix, Inc. (NASDAQ:NFLX) price target has been raised by RBC capital Market analysts from $280 to $330 with an Outperform rating as the stock has achieved a level of sustainable scale, growth and profitability that has not yet exerted its impact on the price. Analysts Mark S. Mahaney, David Bank and Andre Sequin from RBC believe that Netflix looks strong in video online viewing and in interconnected devices like tablets, smartphones and Internet TV’s.
Netflix a dominant player in online video
Netflix, Inc. (NASDAQ:NFLX) has expanded to 31 million U.S. subscribers and 8 million international subscribers, helping the streaming firm to emerge as the largest global entertainment subscription businesses.
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Netflix emerges as one of the most dominant players in online video sites. In a survey by RBC Capital, 43 percent of the respondents preferred Netflix to watch movies or TV shows over any other site expect YouTube. Hulu was preferred by 30 percent of respondents, but it was down by a whisker from 31 percent in a May 2013 survey.
In the survey, 63 percent of Netflix, Inc. (NASDAQ:NFLX) subscribers were either “extremely satisfied” or “very satisfied” with their Netflix subscription, which is a surge from 57 percent in May 2013 survey. Satisfaction levels in the current survey are highest pointing to a trend of gradual recovery. However, the analysts believe that these levels are considerably low from the first half of 2011.
In the survey 63 percent of the respondents are “not at all likely” to cancel their subscription over the next three months. This percentage is higher than 61 percent in May 2013 survey and also above 66 percent in February 2013 survey.
Original content improving
In the survey conducted by RBC Capital, 24 percent of current subscribers hold the view that Netflix’s streaming content has “greatly or moderately improved” over the past 12 months. Another 23 percent believe that it has “slightly improved”. Analysts hold that these levels are stable compared to the levels tracked this year, but are an improvement over the past two years. One of the areas where Netflix is suffering is lack of extensive content. However, the original content over Netflix, Inc. (NASDAQ:NFLX) such as House of Cards, Season 4 of Arrested Development and Orange is the New Black are garnering positive responses for Netflix.
Rising competition in the U.K.
To track the competition, another survey revealed that Netflix is facing rising competition from the United Kingdon. In the survey, 14 percent of respondents in the U.K. voted for Netflix as their preferred site to watch movies and shows, which is an increase from 8 percent in May 2013. However, it lags behind some U.K. sites like BBC iPlayer, which remains the most preferred site in the U.K.
However, subscribers in the U.K. were fairly satisfied with Netflix, Inc. (NASDAQ:NFLX) and mostly preferred the show House of Cards.