Rosenblatt Upgrades Netflix (NFLX) to Buy, $125 PT; Party to Continue

Rosenblatt upgraded Netflix (NASDAQ: NFLX) from Neutral to Buy with a price target of $125 following strong results, saying they expect the stock to continue to trade primarily on subscriber growth trends.

Analyst Martin Pyykkonen cited for four key reasons for upgrading the stock:

• Rapid foreign market expansion across rest-of-world by the end of next year to ~200 total countries (vs. 65 countries by end 2015) and with peak foreign market operating losses (contribution profit) likely occurring within next year
• ASP increases should accelerate even without deliberate changes and adding tiered pricing subscription plans (e.g., multi-stream HHs, Ultra HD or 4K content, multiple video streams per TV set, etc.). Netflix’s blended ASPs were up ~5% in 2Q15, which was a step up from year/year ASP increases last year
• Global content appeal in foreign markets, many of which have a scarcity of good quality local TV/film content available, in addition to just the more basic linear TV substitution that is also one of the key subscriber growth drivers domestically
• Better demonstrated ability to fund original content (while not detracting from more licensed content from TV/film studios) and spreading originals programming and production costs across multiple global markets

For an analyst ratings summary and ratings history on Netflix click here. For more ratings news on Netflix click here.

Shares of Netflix closed at $98.13 yesterday.

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