Orange is the New ‘Green’ for Netflix, Inc. (NFLX)

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By Carly Forster

Netflix, Inc. (NASDAQ:NFLX) is an American internet subscription service of movies and television shows that, over the past few years, has grown into the world’s leading internet television network with over 48 million members in more than 40 countries. Customers pay a low monthly fee to watch unlimited TV shows and movies available on their website without any commercial interruptions. The company has recently bounced back from a two-month downturn in the last five weeks, jumping 40% from $300 to about $430. This could be due to the company’s announcement last month that it would be expanding to six new markets in Europe this coming fall, including Germany, Austria, Switzerland, France, Belgium, and Luxembourg.

There is a lot of excitement about Netflix, Inc. (NASDAQ:NFLX)’s plans for its international expansion and its ultimate revenue growth. However, some are weary that with rapid revenue growth, costs will rise just as fast and ultimately, profit growth may miss expectations.  With that being said, strong international growth has helped cover these costs. In fact, CEO Reed Hastings believes that Netflix, Inc. (NASDAQ:NFLX) can make up to 70 to 80 percent of its revenue in markets outside of the U.S.

Netflix, Inc. (NASDAQ:NFLX) is expected to report their second quarter earnings on July 28, 2014.

Shares of Netflix, Inc. (NASDAQ:NFLX) opened at $430.01 on Friday, June 6. The company has a 1-year high of $458.00 and a 1-year low of $205.75. The stocks daily moving average is $431.63 and has a 50-day moving average of $363.00. The market cap for the Netflix is $25.78 billion and its P/E ratio is 161.64.

On June 5, J.P. Morgan analyst Doug Anmuth reiterated an over-weight rating for Netflix with a $500 price target. He explained, “We expect the late 2014 expansion in Western Europe to increase Netflix, Inc. (NASDAQ:NFLX)’s international opportunity by ~60-70M broadband households. We believe Netflix is well-positioned to grow its penetration in Western Europe based on its broad content selection and merchandising, originals, and marketing capabilities.” Anmuth has a +4.9% average return on all stocks and a 59% success rate according to TipRanks. He also has a +10.9% average return on Netflix stock.

On June 6, Topeka Capital analyst David Miller also reiterated a BUY rating on the stock and raised his price target from $421 to $515. Miller has a +7.3% average return on all stocks and a 67% success rate.

However, on June 4, Seeking Alpha blogger Jeffrey Himelson was not so optimistic. He believed Netflix, Inc. (NASDAQ:NFLX) has some serious competition with companies like Hulu, Amazon, Microsoft, and Yahoo. Because of this, Himelson thinks Netflix will have to pay a hefty sum more for content which will ultimately affect their margins in a negative way. Himselson has a+1.6% average return on all stocks and a 50% success rate.

Netflix (NFLX) currently has an analyst consensus of MODERATE BUY.

Carly Forster writes about stock market news. She can be reached at [email protected]

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