Oppenheimer Says Netflix Now Worth $610/Share

Courtesy of Benzinga.

In a report published Thursday, Oppenheimer analysts maintained an Outperform rating on Netflix, Inc. (NASDAQ: NFLX), while raising the price target from $483 to $610, after the company beat expectations for 1Q15 global net-sub additions.

Netflix reported global net-sub additions for 1Q15 17 percent higher than Street estimates. While US streaming net adds were 27 percent ahead of Oppenheimer’s estimates and 21 percent higher than Street estimates, international net adds were 16 percent and 13 percent higher. “We believe Originals are driving better financial results, as exclusive programming improves efficiencies in content spend by lowering churn,” the analysts said.

Management indicated that original content – House of Cards, Unbreakable Kimmy Schmidt, Bloodline – had driven subs higher, while reducing churn.

Excluding an adverse currency impact, the company’s revenue for the quarter was 4 percent and 3 percent higher than Oppenheimer’s and Street estimates, respectively.

US contribution profit beat Street estimate by 8 percent. The company plans to leverage higher domestic profit to accelerate international growth. Netflix has raised US contribution profit guidance, citing higher allocation of content and marketing to international segment.

“2Q15 global streaming net adds 25% above Street. US profit guidance 9%/7% above Opco/Street on lower churn. Int’l profit, $44M below Street on higher allocation of marketing budget and FX headwinds,” the report mentioned.

The EPS estimate for 2016 has been reduced from $8.64 to $5.87 to reflect the company’s international expansion.

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