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The UBS Note Rocketing Netflix Higher Today

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In a report published Monday, UBS analysts upgraded the rating on Netflix Inc (NASDAQ: NFLX) from Neutral to Buy, while raising the price target from $370 to $565, calling the company as "the apple of our eye."

Netflix's shares surged in 2013 and in early 2014 to $450. Following this remarkable performance, the stock has remained unchanged, although there was volatility between the low $300s and high $400s. During this time, the company's revenue grew 26%.

In the report UBS noted, "We gathered incremental evidence regarding each of the pivotal questions for Netflix. We now have increased confidence for accelerating int'l net additions each of the next few years given UBS Evidence Lab tracking of iPhone and iPad application rankings in each of Netflix's markets."

The UBS Evidence Lab consumer survey conducted in November 2014 highlights Netflix's competitive advantages and differentiated positioning. This supports the company's U.S. growth prospects, "even in the face of an accelerating pace of OTT launches (which we expect are more good news than bad news, in any case)," the analysts commented.

Although there has been growing concerns of a pullback by media studios and networks from selling content to Netflix, a review of the media landscape, including "discussions with each of our media companies over time," the analysts believe that Netflix will "sustain sufficient access to content."

"Given the Company's original content ramp, we found a greater int'l ARPU opportunity than previously forecast; we now expect int'l profits surpass the U.S. in 2020. This change drove our target price significantly higher (85% of our move from $370 to $565) with the rest due to its recent debt raise lowering WACC," the report added.

Latest Ratings for NFLX

DateFirmActionFromTo
Nov 2016Brean CapitalInitiates Coverage OnBuy
Nov 2016Loop CapitalMaintainsBuy
Oct 2016NomuraMaintainsBuy

View More Analyst Ratings for NFLX
View the Latest Analyst Ratings

Posted-In: UBSAnalyst Color Upgrades Price Target Analyst Ratings

 

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