Nomura Securities analyst Anthony DiClemente reiterated a Buy rating and boosted his price target on Netflix (NASDAQ: NFLX) to $750.00 (from $600.00) after modelling a path to 100 million international subscribers.

DiClemente commented, "We introduce our Netflix country-by-country model, expanding on our previous estimates to include explicit forecasts for ~50 of Netflix’s potentially largest markets (please email us for our bottoms-up model). We now estimate that Netflix should have an addressable market of 725mn-730mn households by 2020E, for which we anticipate a penetration rate of 13%; this equates to 94mn international subscribers, up from our previous estimate for 80mn. We believe a growing mix of global content license agreements will result in much higher longer-term operating margins versus Street estimates. As such, we raise our 2020E international contribution margin to 35% from 15%, our 2020E EPS estimate to $45 from $25, and target price to $750 from $600."

The firm believes the three largest drivers to further long-term Netflix upside include:

• Better operating leverage resulting from global content licenses. In our view, given scale economics, international contribution margins in the longterm are likely to achieve parity or better relative to steady-state domestic contribution margins of 40%. Netflix’s international subscriber base will be 65% larger than its domestic subscriber base by 2020E (94mn international vs 58mn domestic), and as such, fixed global content license fees will be spread across a greater number of subscribers. For purposes of our current 2020E forecast, we model a 35% international contribution margin.
• China could represent nearly 10mn subs assuming broadband penetration rates below 5%. We estimate that Netflix should be able to ramp to 4.5% penetration across China’s 240mn 2020E broadband households. At 10mn subscribers, China would represent Netflix’s largest international market.
• Robust legacy international market growth profile. While recent focus has been an opportunity in new international markets, we estimate the average YoY growth across Netflix’s current five largest international markets should equate to a 20%-25% CAGR through 2020E. We estimate that these markets, including the UK, Canada, Brazil, Germany, and Mexico, will comprise 35%-40% of net additions through 2020E and provide a significant runway for user growth in and of themselves.

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Shares of Netflix closed at $654.55 yesterday.