RBC: Netflix' Sweet Spot Not Yet Priced In

Netflix Inc.'s

international growth potential coupled with a lack of investor enthusiasm got a good review from an analyst Tuesday. Netflix, poised for imminent launch in France and Germany, has the highest short interest and lowest Buy ranking among large-cap U.S. Internet companies. "That creates additional opportunity," RBC's Mark Mahaney said in a research note boosting his target 13 percent to $600. Pending rollouts in France, Germany and four other Euro-zone countries will expand the company's international footprint 70 percent and could nearly double its non-domestic subscribers to 21 million by 2016, Mahaney said. NetFlix currently counts 31 million U.S. subscribers and 8 million internationally. The company has boosted its U.S. margins in each of the past five quarters and Mahaney said its "fixed-cost nature" and low subscriber churn rates suggests a further widening is possible. The company "has achieved a level of sustainable scale, growth, and profitability that isn't currently reflected in its stock price," Mahaney said. Around mid-morning Tuesday Netflix was up 1 percent to $484.58 a share.