Piper Jaffray Reiterates Overweight Rating for Netflix (NASDAQ: NLFX) On Optimistic Outlook
April 05, 2010 11:42 AM
Analysts at Piper Jaffray reiterate their Overweight rating for Netflix (NASDAQ: NLFX) on speculation that the company is poised to attract new customers. Analysts note that, “In the last year, Netflix has dramatically expanded its ecosystem of devices enabled for its Watch Instantly digital streaming service.”
The analysts addressed the significance of the various devices capable of utilizing the streaming service: “The majority of devices (>50%) are game consoles, with the remaining devices split between set top boxes, Blu-ray players, TVs, and now, mobile devices like the iPad. If 1% of these device owners that are not currently subs become new Netflix subs in Cy10, it would add 650k subs to our estimate of 16.0m subs by year end, which would translate to an additional $0.20 or 8% EPS for the year.”
In addition to maintaining a Overweight rating for Netflix, analysts set a $78 price target for the stock. They listed possible risks to the achievement of the target price as “competition, video-on-demand, increased subscriber churn rates, and increased costs to acquire subscribers.”
