UBS Hikes Netflix Price Target To $722 From $600

In a report published Wednesday, UBS analyst Doug Mitchelson maintained a Buy rating on Netflix, Inc. NFLX, while raising the price target from $600 to $722, after the UBS Evidence Lab survey highlighted that original content is being "heavily viewed" and with sub growth tracking well. Data from the UBS Evidence Lab survey, which tracked iPhone and iPad app downloads, indicated "continued strength for Netflix, both on a trendline basis and relative to competitors." This is despite the recent increase in competition in the US, with Hulu acquiring programming and HBO Now being launched. Netflix's original content initiatives "are even more impactful than we would have expected," analyst Doug Mitchelson said, while adding that the latest survey showed "very high customer usage of originals." International app data showed consistent or improving trends in all countries since the April update, while data for Australia and New Zealand indicated strength in the regions. Netflix currently address about 185 million international broadband homes, representing about a third of the international marketplace. Mitchelson expects international net additions to continue to ramp with further market launches, including Japan in the fall, and Spain, Portugal and Italy in October. "We see 12.3% int'l penetration by 2020; every incremental +/-1% penetration impacts valuation by 4%," the report added.