Netflix (NFLX) PT Raised to $671 at Bernstein

Bernstein analyst Todd Juenger raised the price target on Netflix (NASDAQ: NFLX) to $671.00 (from $591.00) while maintaining an Outperform rating.

The analyst said NFLX Q4 confirmed many elements of their Bullish investment thesis:

A) The 37mm FY20 net adds seem likely to have high LTV. Overall engagement per member is up "solid double-digits in all regions". Q4 churn was lower both sequentially and y/y.

B) Strong engagement/low churn gave the company confidence to raise prices, which is reflected in their guidance with no visible concern of significant incremental churn.

C) Continuity of the content pipeline is intact, with more originals debuting in FY21 than FY20.

D) ARPU increased in APAC sequentially & y/y, despite mobile-only plans. We believe cord-sharing makes the full-service plans the most cost effective for consumers in markets like India (while also allowing Netflix to set a retail price that signifies the value of the product).

D) FCF positive. Retiring debt. Buyback program as early as 2H21 (while many investors like, this has no impact on DCF, valuation, or TP). We estimate roughly $5bn cash held for liquidity.

F) UCAN is still growing subs, not saturated. We continue to point to the opportunity to increase penetration of older age cohorts, which we believe the pandemic has accelerated.

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