Netflix's (NFLX) Price Target Raised to $125 at JPMorgan
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(Updated - September 27, 2016 9:14 AM EDT)
JPMorgan maintained an Overweight rating on Netflix (NASDAQ: NFLX) and raised its price target to $125.00 (from $116.00). The price target is based on sum-of-the-parts analysis, said analyst Doug Anmuth.
Anmuth explained, "We believe Netflix is on track toward significantly disrupting the linear TV market through strong subscriber growth, content differentiation, and a better consumer proposition. We think the company is benefiting from key secular trends, including the proliferation of Internet-connected devices and increasing consumer preference for on-demand video consumption over the Internet rather than linear TV. Higher subscribers have a disproportionately larger impact on profitability as relatively fixed content costs account for the majority of Netflix’s costs."
"Our SOP analysis employs a 14x multiple on 2018E US streaming EBITDA of $1.7B, 3.0x 2018E US DVD EBITDA of $10M, and 5x 2018E International revenue of $6.7B. We believe that the 14x 2018E EBITDAmultiple and the 5x 2018E Revenue multiple are appropriate as they are either in-line with or at a slight discount to high-growth companies with unique assets, some of which are further along in profitability (such as FB&LNKD)," added the analyst.
Shares of Netflix closed at $94.56 yesterday.
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