Netflix (NFLX) PT Boosted to $600 at RBC Capital

RBC Capital analyst Mark Mahaney reiterated an Outperform rating and boosted his price target on Netflix (NASDAQ: NFLX) to $600.00 (from $530.00) following their new NFLX Int'l Rollout Analysis, and positive U.S. & U.K. survey results.

Mahaney cited three key updates:

#1: New European Launches Highlight Significant Growth Opportunity – Netflix launches in Germany, France & 4 other European countries are imminent. In anticipation, we have developed a detailed International Rollout Analysis. Key points: 1. Netflix’s International rollouts to date have been relatively successful – NFLX’s 14MM International Subs represent 15% penetration of all bband households in current markets, impressive for a new consumer offering. 2. The New European Launches could/should be materially impactful to NFLX – They represent a 65MM increase in NFLX’s International bband footprint (a 70% increase). Assuming 10%-20% penetration, the New European markets could generate 7-13MM new subs for NFLX by 2016. 3. Long-term, we believe NFLX can generate 60MM International Subs by achieving 20% penetration of bband households in the top-20 non-U.S./China broadband markets.

#2: U.S. Survey Continues to Support Compelling Value Proposition – We ran our 12th 1,000+ U.S. Internet User survey. Key findings: 1) 42% of respondents use Netflix to watch Movies and TV shows – 2ND only to YouTube (44%) and well ahead of Amazon (23%); 2) 65% of current Netflix subs are “Extremely satisfied” or “Very satisfied” – this is the 2nd highest level we have tracked over the past three years, with the 23% “Extremely satisfied” response the highest we have tracked; 3) Churn levels appear very low – a record high 73% said they were “Not at all likely” to cancel in the next 3 months; & 4) Original Content increasing as an anticipatory anti-churn factor – a record high 57% agreed that OC was “Extremely important”, “Quite important”, or “Moderately important” to their decision to remain a sub.

#3: U.K. Survey Reveals Improving Value Proposition – We ran our 5th 2,000+ U.K. Internet User survey. Key findings: 1) A record high 25% use Netflix to watch Movies and TV shows – well behind YouTube (42%) but increasingly ahead of Amazon (15%); 2) NFLX subs appear reasonably satisfied – 70% are “Extremely satisfied” or “Very satisfied,” consistent with prior levels and an intrinsically high level; & 3) U.K. Churn levels are likely falling – a record high 44% said they were “Not at all likely” to cancel in the next 3 months.

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 $479.33 yesterday.

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