Bank Of America Cheers Netflix Set-Top Box Deal With Comcast; Maintains Buy

According to media reports, Netflix, Inc. NFLX and Comcast Corporation CMCSA have entered into an agreement that allows Netflix to be streamed on Comcast’s X1 set-top box platform.

Nat Schindler of Bank of America Merrill Lynch maintains a Buy rating on Netflix, with a price target of $146.

Netflix-Comcast Deal

“While no definitive timing was announced, the companies indicated it would likely launch in 2H16,” Schindler mentioned.

Comcast would become the first major U.S. cable company to add streaming access to its core cable box system, which the analyst noted would make it easy to log onto Netflix via the set-top box.

Although neither company has provided any details on the deal, Schindler believes Comcast would receive some form of compensation for new Netflix subscribers through its platform.

Multiple Advantages

The analyst believes apart from expanding its subscriber base, this agreement would offer Netflix several benefits, including “1) expanded household reach to households that may not have a stream player like a game console, smart TV, or streaming stick/box; 2) potential integration into monthly cable bills for stickier service; and 3) stronger positioning for future partnerships with other Pay-TV providers in the U.S.”

Schindler also expects Netflix to look at more agreements with other cable operators following the Comcast deal.

The recent regulation changes by the Federal Communications Commission (FCC) could also lead to potential benefits for Pay-TV operators from the addition of Netflix.