Why Netflix Continues To Surge? SunTrust Robinsons' Bob Peck Explains

Stock of Netflix, Inc. NFLX is on a continuous uptrend, making all time highs after reporting spectacular fourth-quarter results. Star Internet analyst, SunTrust Robinson Humphrey’s Bob Peck was on CNBC Wednesday to discuss what’s pushing Netflix higher.

Why Netflix Continues To Surge?

“One, you [have] seen explosion of video content, the cutting of the cord from traditional TV and cable companies and you have seen a lot of companies [graph] and Netflix doing particularly well with ‘House of Cards’, Peck said. “Moving further into the movie theatres too with crouching tiger, obviously ‘Orange Is The New Black’. So, lot of great content that’s taking younger demographics and having them come more to the Netflix versus signing up for cable.”

Is There Any Risk Of The Third-Quarter Earnings Miss Repeating Itself?

“Yeah there is,” Peck replied. “Of rolling out, the international market is the big focus here, you have about 17 million subs out there that could be at least as big as the U.S. size. The markets are going in north of 30 million subs, 40 million subs and any time you allow new markets there could be little hiccups or bumps along the way.”

He continued, “I think, that’s what spooked people in the third-quarter, but the fourth-quarter you saw them beat both in the domestic side as well as the international side and seems the content is really resonating with consumers.”

Is Your Neutral Rating On The Stock With A Price Target Of $410 Because Of Costs Associated With Expanding To Europe, Japan And Elsewhere?

“Yes, they are going to spend about $3 billion or so on content,” Peck said. “To put that in perspective, that’s about $1.5 billion for Amazon, but [this really isn’t] valuation, the stock currently trades at around 50 times EBITDA. So, adds to the top-line growing at around 25p or so. We love the story, we love the opportunity, we love the underlying trends, we […] look for a better point to get into the stock.”