Netflix (NFLX) Price Target Raised to $850 at Pivotal Research
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Pivotal Research maintained a Buy rating on Netflix (NASDAQ: NFLX) and raised its price target to $850.00 (from $650.00). The main reason for the change was an increase in international subscriber forecasts.
Analyst Jeffrey Wlodarczak said, "Based on the outlook for a faster than anticipated roll-out of NFLX international markets we moved up our new market launch forecasts, added China (including a 5% penetration forecast of broadband households [or 13.5M subscribers] by 2021) and South Korea (12.5% by 2021 or 2.5M NFLX subscribers) to our forecasts for the first time, and increased our programming & marketing spend forecasts to support this extra growth."
"Overall we raised our 2021 international paying subscriber forecasts from 78M to 95M which drove our total forecast NFLX subscribers by 2021 from 138M to 160M vs. our 69M forecast by YE’2015. The international forecast implies an 11% penetration of our estimate of NFLX’s 2021 total international household opportunity ... Net net the model changes + increase in our terminal EBITDA multiple from 17X to 20X (to account for faster EBITDA growth) drove a $200 increase in our YE’15 target to $850," added the analyst.
Shares of Netflix closed at $617.87 yesterday.
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