Netflix Inc. was upgraded to purchase from neutral at Citi Research in front of the Internet television company’s first-quarter earnings on April 15.
Analyst Mark Could also raised his price target on the stock to US$525 from US$409, noting that it is recent pullback supplies a buying opportunity.
One reason is because competition concerns look overdone. May believes investors are paying reasonable multiples for more established markets for example North America and also the U.K., but next to nothing for international markets that make up a total broadband household opportunity of 350 million.
The analyst also noted that Netflix’s content lineup has improved in 2015 and newer releases are becoming good reviews, which bodes well for subscriber growth.
“Numerous data points still support how disruptive Netflix would be to video viewing habits and also to the broader media landscape,” May said in a report.
“In reality, this is not a call on the quarter; we recognize that a beat or miss of one hundred thousand domestic subscribers may cause Netflix shares to become quite volatile around earnings, and that we have found no data point that people can use to calculate the subscriber number with such precision,” he added.
“Over a 12-month horizon we believe shares are poised to outperform as development in international markets becomes more fully appreciated and as Netflix\’s original content lineup drives sustainable subscriber growth in the U.S.”