The analyst’s verdict? Long term international subscribers are looking better than ever, with Wlodarczak now angling for 20 million more in store for the video streaming content king by 2024. While the analyst once thought Netflix would have 230 million international subscribers in its base within the next six years, now the analyst calls for 250 million international subscribers.
Additionally, the analyst is boosting his long-term domestic average revenue per user (ARPU) expectations on a +1 upturn to $16 by 2024, as the company has showcased “pricing power.” The analyst is scaling back his 2024 international ARPU projection down $1 to $12.50 to take under account “future subscribers from likely lower ARPU generating countries.” By 2024, Wlodarczak wagers the giant will be growing EBTIDA at a rate of around 30%.
Therefore, the analyst confidently reiterates a Buy rating on NFLX stock while lifting the price target from $300 to $400, which implies a 25% upside from current levels. (To watch Wlodarczak’s track record, click here)
Keep in mind, that following Netflix’s fourth quarter print, “the market appeared to effectively give NFLX management carte blanche to spend aggressively to drive healthy subscriber growth,” highlights Wlodarczak, concluding: “All else being equal with the broader markets, as long as NFLX continues to beat and raise on subscribers we believe the stock will continue to work. We made no changes to our ’18 forecasts and expect a solid year driven by the launch of new content + the benefit of increasing traditional distribution channels (cable and telcos) + increasing availability of broadband at rising speeds + the aforementioned decision to significantly ramp marketing going forward. In our opinion, the biggest short/medium risk to the story is a material subscriber miss against the backdrop of materially increased spending, but we feel comfortable in at least the near and medium-term outlook for NFLX (highlighted in 4Q results where NFLX took a healthy price increase and yet was able to materially beat subscriber expectations).”
TipRanks underscores a largely optimistic analyst consensus surveying NFLX stock. Out of 33 analysts polled in the last 3 months, 23 are betting on Netflix with a Buy rating, 9 maintain a Hold, while 1 analyst issues a Sell. However, based on these analysts’ expectations, is the optimism dragged down by caution looming in the air? Consider that the 12-month average price target of $279.16 reflects 14% in loss potential for Netflix.