Goldman Sachs Raises PT on Netflix to $115

Goldman Sachs has published a research report on Netflix

following the company's 4Q earnings that were driven by U.S. streaming outperformance. In the report, Goldman Sachs writes, "[W]hile its 1Q guidance came in belowexpectations, primarily on higher costs in the international business. While the company did not provide formal FY guidance, it expects a loss every quarter, as DVD subs continue to decline quarterly, and content costs continue to increase qoq, though both at decelerating rates. With 1.7M net US streaming subs added already in 1Q, the 1.5M midpoint of guidance seems extremely low. Even with 1.5M subs lost in the DVD business, it seems likely that sub growth will accelerate in 1Q. Content costs continue to rise significantly, 52% yoy in the form of cost of subscription, and 54% qoq in the form of capitalized content library costs on the balance sheet. At the end of 4Q11, Netflix had $3.9 bn in streaming content obligations, up from $3.5 bn in 3Q." Goldman Sachs maintains its Neutral rating and has raised the price target from $82 to $115 on Netflix, which closed yesterday at $95.04.