Shares of Netflix (NFLX - Free Report) surged on Tuesday after Morgan Stanley (MS - Free Report) and JPMorgan (JPM - Free Report) analysts raised their price targets for the streaming video powerhouse, both pointing directly to Netflix’s massive growth opportunity in one area.
Morgan Stanley and JPMorgan analysts both substantially upped their price targets for Netflix on Tuesday, citing international expansion as the primary reason for their heightened optimism. JPMorgan analysts lifted their Netflix price target from $285 per share to $328 per share and reaffirmed their “Overweight” rating.
At the same time, analysts at Morgan Stanley raised their price target from $275 per share to $350 per share. This would mark a nearly 20% premium compared to Monday’s closing price of $289.93 per share.
"We believe Netflix is still in the early stages of global adoption," MS analyst Benjamin Swinburne wrote in a note to clients. "While there remains a big opportunity in many of Netflix's older markets, as evidenced by continued strong growth in the U.S., Asia is perhaps the largest untapped opportunity and likely its most challenging one to capture."
Morgan Stanley also predicted that Netflix could see its subscriber numbers hit over 300 million by 2028. But, in order to understand how bullish this new Netflix outlook really is, we have to take a quick look at Netflix’s current subscriber figures and growth estimates.
Netflix User Metrics
At the end of 2013, Netflix claimed just 44 million total members. Last year, Netflix added 24 million new memberships alone, up from 19 million in 2016. Netflix now boasts over 117 million members in more than 190 countries, but it also faces increased competition in the U.S.
A recent CNBC survey found that nearly 60% of Americans already use some type of streaming service, with Netflix the most widely used at 51%, while Amazon (AMZN - Free Report) Prime came in second at 33%.
With that said, Netflix has committed billions to original content this year as it fights for users against the likes of Hulu, HBO, and soon enough Disney (DIS - Free Report) .
Looking ahead, Netflix’s Q1 earnings are expected to pop by 57.5% to hit $0.63 per share, based on our current Zacks Consensus Estimates. Meanwhile, its first quarter revenues are projected to climb by nearly 40% to reach $3.69 billion.
But aside from the raw top and bottom line figures, investors should pay close attention to Netflix’s international subscriber growth when the company reports its Q1 financial results after market close on Monday, April 16.
For reference, Netflix noted on its fourth-quarter earnings call that it expects to add 1.45 million new members in the U.S. and 4.9 million new international subscribers in Q1.
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