Morgan Stanley Maintains Netflix As 'Top Pick,' Raises Price Target

Benjamin Swinburne of Morgan Stanley on Wednesday reiterated an Overweight rating on Netflix, Inc. NFLX with a price target raised to $450 from a previous $425 while maintaining the name as a “top pick.”

“Netflix 4Q results reinforced our bullish view on the stock, and that the recent pull-back in shares is a buying opportunity,” Swinburne wrote. “We were encouraged by the U.S. and international subscriber strength, long-term expansion and margin plans.”

Swinburne adds that Netflix's goal to accelerate and complete its global expansion will occur by 2017, ahead of prior estimates. The analyst adds that growth is coming with a “healthy” scaling of profits that allows the company to better source content on a more efficient basis than its competitors.

Swinburne also notes that Netflix's ability to grow its average revenue per user annually “also foots with our view of pricing power” for the service. In fact, the analyst maintains a view that at scale, Netflix can achieve higher EBIT margins compared to capital-intensive incumbent distributors but still below high-margin cable networks.