Is Netflix, Inc. (NASDAQ: NFLX) fairly valued? Most analysts have mixed views on the subject and price targets range between $245 and $600. 24/7 Wall St has referenced a recent report by Argus to help shed some light on Netflix’s valuation, and more importantly on what sort of competition Netflix is facing.

Argus launched coverage of Netflix with a Hold rating. The independent research firm did not issue a price target but it did establish earnings per share (EPS) estimates of $2.94 for 2015 and $4.38 for 2016. Thomson Reuters has consensus earnings estimates for 2015 as $3.37 per share and in 2016 as $5.49 per share.

Although the firm does note that Netflix shares have pulled back from their all-time high near $490 in February, Argus remains on the sidelines for now. Before raising the rating, the firm must find a more appropriate entry point possibly in the low $300’s.

Netflix’s core strategy is to grow its internet streaming subscription business both domestically and internationally. As the company expands into Europe and internationally, it expects to spend heavily on international expansion over the next two years and thus projects lower operating income in 2015 than in 2014. Netflix expects to complete its international expansion by the end of 2016. The effort is focused on countries in Western Europe, Australasia and East Asia that have significant consumer broadband usage.

One way Netflix is driving growth is through investments in original content, or programming not licensed from third parties. Compelling original content attracts new subscribers and helps Netflix to differentiate its service from other entertainment options. By pursuing this strategy, Netflix has taken a page from premium cable networks like HBO. Netflix scored big in its first real hit with “House of Cards”. The company scored again with another favorite, “Orange is the New Black”. Both series have been critically acclaimed and even renewed for additional seasons.

In terms of Netflix’s competition, Argus detailed in its report:

While Netflix has some clear first-mover advantages versus Hulu and Amazon Prime, currently its only significant competitors in long-form internet video, the streaming-video market is about to get more crowded. Media giants CBS and Dish have already launched internet video-streaming services and will soon be followed by HBO, Sony, and others. Netflix also cannot ignore the dominant player in short-form internet video, Google’s YouTube, as well as recent moves by Facebook into the space. In the rapidly developing internet-video landscape, Netflix’s position is by no means secure.

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Thursday afternoon, shares of Netflix were down 1% at $417.58 on a 52-week trading range of $299.50 to $489.29. The stock has a consensus analyst price target of $448.25.

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