KeyBanc: Buy The Dip In Netflix

In a report published Thursday, KeyBanc Capital analyst Andy Hargreaves maintained an Overweight rating and price target of $665 on

. The analyst believes that any meaningful pullback in the share price would present an attractive buying opportunity. "We see a neutral near-term risk/reward as NFLX likely prices in potential upside prior to the global expansion in 2016. Beyond that, we continue to believe the secular transition to online video, Netflix's leadership position, and potential upside in the model can drive the shares higher," Hargreaves explained. Given the 99 percent year to date appreciation in Netflix's share price, the analyst believes that the company's expansion in 2015 is also reflected in the valuation. Global expansion is expected to drive further upside, although not until 2016. "We estimate Netflix's global deals are suppressing current incremental margins by 5 percent to 8 percent. This suggests the potential for incremental margins could expand by a like amount once Netflix has full global distribution," Hargreaves added. In addition, the analyst believes that Netflix would be able to beat the sell-side expectations for international subscription growth in 2016/17. According to the KeyBanc report, "While Netflix seems to lack clear upside drivers in the near term, we continue to believe its leadership position in on-demand video provides long-term opportunities to grow subscribers and profits in excess of current expectations, as well as strategic optionality to enter tangential businesses."