RBC Capital Sees Netflix (NFLX) Path to ~$50 in EPS

RBC Capital analyst Mark Mahaney reiterated an Outperform rating and $500 price target on Netflix (NASDAQ: NFLX) after performing surveys in the US and Mexican markets. While the US survey data is impressive, the findings from the Mexican survey may be more impactful for the company's long term growth opportunity in dominating International markets. Key points include:

1) 76% of Mexico respondents watch Netflix, followed by YouTube (73%) and Amazon (43%)

2) 87% of respondents were “Extremely/Very satisfied” with the service, with those “Not at all” satisfied well below 1%.

3) Only 13% were “Extremely/Very likely” to cancel Netflix, the lowest across all
countries surveyed to date, indicating a low risk of churn

4) Local Language Originals (LLOs) are proving the benefit from investment as Netflix Originals claimed all top 5 spots of the most watched shows on Netflix with 4 in local language

The analyst stated, "We view these results as a distinct positive for Netflix’s competitive position in Mexico (and LatAm) - Penetration ahead of the pack, high Sat score and low Churn, with LLOs ruling the zeitgeist". He went on to state "Were Netflix to achieve global (ex-CCP) broadband penetration similar to what it has achieved in North America…that’s 500MM subs…and close to $50 in EPS…and a much higher stock price, in our view".

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 $418.50 yesterday.

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