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Netflix (NFLX) PT Raised to $450 at Citi on Greater Sub Additions

May 21, 2020 6:05 AM EDT
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Citi analyst Jason Bazinet raised the price target on Netflix (NASDAQ: NFLX) to $450.00 (from $350.00) noting that over the last several years, there has been a close relationship between Netflix’s content spending and net adds. . He maintaining a Neutral rating because the Pre-COVID-19, landscape showed the Street modeling robust net adds, but muted growth in content spending, a divergence that implied content costs would be higher than expected.

However, he now believes the dynamics may be changing stating "In our view, the current environment may impact Netflix in two ways. First, we suspect net adds are apt to be decoupled from content spending for the next few quarters. Second, in the economic recession that’s likely to follow the pandemic, US cord cutting will likely accelerate. This may be a positive for Netflix because it gives the firm more pricing power (as cord cutters view Netflix as their primary pay TV experience rather than a complement to pay TV)". He went on to state "We now expect Netflix to garner 27 million net adds in 2021 (up from 24 million). And, we expect the firm to garner 22 million net adds in 2022 (up from 21 million)".



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