Video streaming company Netflix, Inc. (NASDAQ:NFLX) has come a long way since it started as a movie rental business in 1997. Not only has the company been expanding at a rapid rate, but it also just came off a big Emmy’s win for its original content. Most recently, Netflix became available in Japan, Australia, and New Zealand and has plans to expand to Italy, Portugal, Spain, Hong Kong, Singapore, and Taiwan between October of this year and 2016.
UBS analyst Douglas Mitchelson weighed in on Netflix on September 28, reiterating a Buy rating on the stock with a $143 price target. The analyst acknowledged that while Netflix has had a slow start in Japan, the company’s performance in Australia and New Zealand remains strong. Mitchelson expects “an accelerated pace of launches [in] the remainder of 2016 to hit management’s goal of worldwide coverage by year-end 2016.”
Furthermore, the analyst believes the company is in a stable competitive environment. He noted, “Online video is not a zero sum game, and, while we expect Netflix to lead, it does not need to dominate to create meaningful value given the likely ultimate market size.”
Douglas Mitchelson has rated Netflix 8 times total, earning a 67% success rate recommending stocks and a +9.7% average return per recommendation when measured over a one-year horizon and no benchmark. Overall, he has a 79% success rate recommending stocks and a +17.9% average return per recommendation.
On the other hand, Evercore ISI analyst Ken Sena reiterated a Sell rating on Netflix on September 24, citing that content providers will likely start demanding more money. He noted, “Recent media industry comments and the growth in streaming choices seem to indicate that more than ever content providers are driving a harder bargain when it comes to selling their streaming rights.”
Additionally, the analyst doesn’t see a big margin expansion opportunity for Netflix, unlike business giants Facebook, Apple, and Google. He cited that as Netflix “move[s] into international markets with more diverse content needs, we don’t see the margin leverage. We take [Netflix] at their word [that] they will be break-even ultimately, but we don’t see massive margin expansion beyond that.”
Ken Sena has rated Netflix three times total, earning a 50% success rate recommending the company and a -30.5% average loss per recommendation when measured over a one-year horizon and no benchmark. Overall, he has a 54% success rate recommending stocks and a +5.9% average return per recommendation.
Out of 28 analysts polled by TipRanks within the past three months, 20 are bullish on Netflix, 6 are neutral, and 2 are bearish. The average 12-month price target on the stock is $122.47, marking a 23.12% potential upside from where shares last closed.