Netflix (NFLX) Global TAM is 650M Households By 2026 with Over 50% Penetration, Stifel Says; PT Raised to $650
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Stifel analyst Scott Devitt raised the price target on Netflix (NASDAQ: NFLX) stock to $650.00 (from $580.00) while maintaining a Buy rating after revisiting their thoughts on Netflix's TAM opportunity and outlook.
They now estimate Netflix's international TAM (ex. China and UCAN) at 544mm+ broadband households, on its way to 640mm+ broadband households by 2026E, citing data sourced from Kagan.
In 2021E, they forecast Netflix's penetration rates in UCAN, EMEA, LATAM, and APAC will reach 57%, 26%, 44%, and 19%, respectively.
By 2026E, they estimate Netflix will reach a 58%, 42%, 53%, and 31% penetration rate in these markets, respectively, generating 129mm+ international (ex-UCAN) net sub adds through 2026E, resulting in 346mm global paid subscribers.
Devitt added that as Netflix moves past the pandemic pull forward, "we believe the next six months will show accelerating subscriber growth against a slate of new high quality content during seasonally favorable quarters for sub growth."
They see the company nearing a period of sustained free cash flow generation, which should enable a long runway of self-funded content creation, reduce the need for external financing, and allow the company to return capital to shareholders.
Netflix stock closed at $573.14 on Tuesday.
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