Sanderson: Netflix 'Outstanding' Opportunity Despite Macro Weakness

MKM Partners on Wednesday issued a company report on Netflix, Inc. NFLX after analyst concerns over the macroeconomic environment's effect on the company's stock. The firm rates Netflix as a Buy and with a $145 price target.

Analyst Rob Sanderson wrote, "We think that this could continue to be a challenging period for the stock, but remain confident in fundamentals, long-term earnings power potential, and significant opportunity for market cap appreciation. Our concern stems from caution on the macro environment...we would use near-term weakness to accumulate large positions for significant long-term gain."

Shares traded recently at $91.59, down 6.3 percent.

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MKM Partners highlighted two keys that show the strength of Netflix heading into 2016:

1. Strong momentum in the international markets

Analysts expect 16.3 million net paid additions in 2016 based on Netflix's strong penetration rate shown in the Q4 earnings report. This demand is can be attributed to high-quality programs that adapt to varying market and user preferences and entertaining original content.

2. Netflix's service would be in high demand in recessions

MKM analysts believe that in the event of a recession, customers would be more likely to cut cable out of their budget and go to Netflix for a cheaper alternative for content. Thus, Netflix's operational strength can accelerate in both strong and weak market conditions, reducing the risk of the company.