BTIG upgraded Netflix, Inc. NFLX on Monday from Neutral to Buy with a $600 price target.
Analysts Richard Greenfield and Brandon Ross acknowledged their September 2013 downgrade “was clearly a mistake” and they now expect 100 million worldwide subscribers by 2017.
The new price target was “based on a 24x multiple of 2016 EBITDA discounted back one-year at 15 percent, adjusting International contribution margin to a “positive” 25 percent versus what we expect to be reported losses.”
Greenfield’s EPS estimates were well below consensus at $4.05 for 2015 versus $6.45.
The report noted that “Netflix is focusing on expanding its overseas footprint and investing heavily in higher-quality content to accelerate its subscriber growth trajectory. While we believe management's global break-even comments are overly conservative, we do take a far more aggressive view of content/marketing spend than is embedded in consensus expectations.”
On Friday, Cantor Fitzgerald also commented on potentially more growth ahead for Netflix.
Netflix, Inc. closed at $438.58 Monday, down 2.99 percent.
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