UPDATE: Morgan Stanley Upgrades Netflix On International Opportunity
In a report published Friday, Morgan Stanley analyst Scott Devitt upgraded Netflix (NASDAQ: NFLX) from Underweight to Equal-weight following fourth quarter results.
Devitt remarked on his prior expectation that Netflix “would enter a period of slowing US sub growth before International users could offset the slowdown. We were wrong.”
Following fourth quarter 2013 results, Morgan Stanley noted that increased the company's international strength shielded any signs of domestic slowdown. Devitt commented that Netflix's international business and could continue to significantly increase net sub adds with a European expansion in this year's second quarter. The analyst reported that the European expansion may include Germany, France, Spain, and Italy. Devitt added, “These countries in aggregate represent an opportunity nearly the size of the US, and rolling out to these markets could significantly alter the trajectory of international sub adds.”
Morgan Stanley further noted long-term opportunity from Latin American infrastructure improvements. The analyst reported that with inadequate bandwidth to stream Netflix in HD or DVD quality in Latin America. Devitt commented, “Data from Akamai suggest that these countries are dramatically improving their average bandwidth, and Latin America could be a much bigger opportunity over the next 3-5 years.”
The analyst increased international streaming subs for 2014, 2015 and 2016 to 16.9M, 23.6M, and 30.3M, respectively. Devitt added that he expects “the current stock momentum should continue until the global subscriber trajectory moderates.”
Shares of Netflix closed at $404.67 on Thursday.
Latest Ratings for NFLX
|Mar 2015||Argus Research||Initiates Coverage on||Hold|
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