The firm believes that Netflix will benefit from a reduced float that will amplify improving fundamentals. Analysts Tony Wible and Murali Sankar were quoted as saying:
Recent developments, including the DIS deal, the potential for a Sony deal, and the new CDN platform, are changing how Studios, MSOs, and investors approach the company. Expectations for sub growth have come down, and sell side sentiment is generally pessimistic, setting the stage for upside driven by new subs, content cost control (for existing content), and a potential price increase. Competition has not yet materialized to the extent that it poses significant near-term risk.
Janney went on to show that Netflix earnings growth will be subdued in the foreseeable future on international expansion costs. The firm thinks investors will look past this and value the company more on its longer term growth potential. If so, a higher multiple can be sustained and any pullbacks in the stock represent buying opportunities.
Netflix shares closed yesterday at $97.70 and shares are up 2% at $99.42. The consensus price target from Thomson Reuters is still much lower than the current price at $71.36 and the 52-week trading range is $52.81 to $133.43.
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