Analyst Highlights Netflix As 'Attractive Potential Acquisition Target For Mega-Cap' Cos.

A Pacific Crest analyst made some lofty comments on Netflix

Tuesday morning, suggesting the company could be an attractive takeover target for one of the massive tech or network companies. In an earlier research note, analyst Cory Barrett said, “we see the potential for significant upside in NFLX as the valuation begins to reflect the company's global growth prospects, the full scope of its near-term pricing power, and its growth potential beyond 2016”. Harboring a view Netflix is heavily undervalued, Barrett's report goes on to say “Netflix has developed one of the best models for monetizing premium video content online." He believes the company's scale, its recommendation engine, cloud enterprise, streaming platform, device diversity and exclusive content relationships make it very attractive as an acquisition target for mega-cap tech firms and network operators. Though Barrett isn't seeking a play on an acquisition in the near future, he sees limited down side to the share price given Netflix's strategic value. Barrett informed investors of his key assumptions for a $520 price target as: 60 million subscribers, 80 million international subscribers by the end of 2022 and a gradual increase from $8 average revenue per user to $10 ARPU over the next eight years. The Pacific Crest analyst maintains an Outperform rating on shares of Netflix. Shares of Netflix last traded at $322.92, up about 2.8 percent from Monday's closing price.