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Netflix, Inc. (NFLX): The Growth Keeps Spinning Forward

GBH Insights' Daniel Ives now looks for 19% in upside potential for Netflix stock.


The Netflix, Inc. (NASDAQ:NFLX) “growth machine” is unstoppable from the eyes of GBH Insights analyst Daniel Ives, who cheers all indications of “content, content, content” from the king of video streaming.

On back of the company’s first Oscar win, the analyst reiterates a Highly Attractive rating on NFLX stock while bumping up the price target from $310 to $375, which implies a 19% upside from current levels. (To watch Ives’ track record, click here)

Ives is more bullish than ever on Netflix stock, pinpointing a slew of “growth levers” raring to “fuel” both domestic and “especially” international penetration of new consumers. Highlighting the Oscar’s ceremony triumph, the analyst now sees the platform’s credibility gaining among “Hollywood circles,” who recognize top-notch talent looking at various major film projects, content deals down the line, among even more original programming plans. All of this Ives believes will keep this “content machine” kicked in high gear “for years to come.”

Keep in mind, this is a company ready to shell out as much as $8 billion on content for 2018, where 30% to 35% will head to support original programming and roughly 120 million subscribers- a base that is getting bigger as time passes. Therefore, “we are incrementally bullish that the company remains in the early days of a golden market opportunity.

“In addition, our latest survey work with our GBH FAANG Tech Tracker show that the average Netflix user is watching the streaming service 10 hours+ per week which is nearly double its nearest competitors Amazon and Hulu which is closer to 5 hours per week, an ‘eye popping’ disparity in our opinion. Our bullish thesis on Netflix is based on our belief that the company‚Äôs competitive moat, franchise appeal, ability to increase international streaming customers through 2020, and original content build out will translate into robust profitability and growth as the next phase of this story plays out over the coming years with roughly $10 of earnings power by 2022. We also believe Netflix (as well as other FANG names) is essentially ‘insulated’ from any global tariff/trade war worries which is a safety blanket in a rocky political time potentially ahead,” asserts the analyst, seeing a multitude of reasons to bet on this tech leader.

TipRanks underscores apprehension in the ranks on Wall Street, but a consensus leaning towards the bulls. Out of 33 analysts polled in the last 3 months, 22 are bullish on Netflix’s success, 10 remain sidelined, while 1 is running for the hills. However, the consensus average price target of $280.52 suggests a loss potential of nearly 12% for the stock, indicating caution looms over analysts’ expectations.