UPDATE: Netflix (NFLX) Price Target Raised to $370 at MKM

October 1, 2013 7:44 AM EDT
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Price: $133.26 +0.28%

Rating Summary:
    33 Buy, 22 Hold, 10 Sell

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(Updated - October 1, 2013 10:47 AM EDT)

MKM Partners maintained a Buy rating on Netflix (NASDAQ: NFLX) and raised its price target to $370.00 (from $285.00). The new target is the highest on the Street. Analyst Rob Sanderson thinks international sub adds will surprise investors and eventually be as larger or larger than domestic subs.

"Integrating with MSOs Virgin (UK) and ComHem (Sweden) suggest cable op's are starting to view NFLX as a programmer and a partner that can enhance their competitive advantage in broadband," said Sanderson. "Anecdotes from the UK are encouraging, suggesting NFLX is becoming a "must-have" service. This is the most competitive market and the company was not a first mover. We continue to think international subs will surprise and eventually be as large (or larger) than domestic."

"The economics of entertainment video will be redistributed with the shift to Internet-delivered services. Video is a $200bn market in the U.S. alone. NFLX is becoming more generally seen as a driving force and prime beneficiary," added the analyst.

Sanderson doesn't expect Netflix to raise prices soon. Instead, he thinks the company will focus on mass penetration.

In conclusion Sanderson said, "We are somewhat less aggressive after the impressive stock run, moving through our previous two price objectives that were viewed as aggressive when set. We do however continue to believe NFLX can be a $75Bn market cap company in 5-7 years. We recommend maintaining core positions and taking advantage of any pullbacks."

For an analyst ratings summary and ratings history on Netflix click here. For more ratings news on Netflix click here.

Shares of Netflix closed at $309.21 yesterday.

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