Shares of Netflix Inc. rose nearly 4% on Tuesday in a declining market as three analysts moved to raise their stock price targets and downplayed the competitive threat to the streaming giant from its companies. rivals.
The stock ended the session up 3.7% at a record $ 404.98, closing above the $ 400 level for the first time. It was up 1.3% in pre-market trade on Wednesday.
Analysts remain bullish on Netflix despite looming streaming challenges from Walt Disney Co. and other media giants.
GBH Insights director of technology research Daniel Ives on Tuesday raised the company’s price target to $ 500 from $ 400, citing a recent GBH survey showing that Netflix NFLX,
subscribers watch the streaming service twice as long as its closest competitors. According to the survey, the average Netflix user watches the streaming service about 10 hours per week, while Amazon.com Inc. AMZN subscribers,
and Hulu looks closer to five. Ives called it a “flashy eye” disparity. Hulu is jointly owned by Disney DIS,
AT&T Inc. T,
via Time Warner Inc., Comcast Corp. CMCSA,
and 21st Century Fox Inc. FOXA,
Ives also acknowledged that Disney, with its formidable domestic box office share and streaming service slated to launch in 2019, is the most viable threat to Netflix’s current dominance in streaming. Disney made a $ 52.4 billion bid last year for 21st Century Fox’s entertainment assets, which include Twentieth Century Fox TV and movie studios; cable networks, including FX and the National Geographic Channel; Star of India; a 39% stake in Sky PLC UK: SKY
and majority control of Hulu. If Disney were to acquire these assets, it would become a “content monster” with a “unique network of distribution capabilities and unmatched brand awareness,” Ives wrote.
Despite this, GBH said it maintains its âvery attractiveâ rating for Netflix; a bidding war between Disney and Comcast Corp., which made its own $ 65 billion cash offer for those same Fox assets, and a potential breakdown of Fox assets, would be a win for Netflix, according to Ives.
Netflix is ââalso expanding its appeal globally, opening up a potential market of 700 million subscribers by 2020, Ives wrote. The company has devoted significant resources over the past two years to developing a global distribution arm and customer base in over 100 countries. Ives believes Netflix’s âholy grailâ for growth and profitability will be its international customers, and its international growth shows âmajor tailwindsâ.
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PiperJaffray also raised its Netflix price target to $ 420 from $ 367 on Tuesday, maintaining its “overweight” rating for the streaming company. The company investigated Google GOOGL linked to Netflix,
conducts research to gauge subscriber levels, looking at the year-over-year changes in the number of search terms such as “Netflix Customer Service” and “Netflix Shows”. The survey indicates a strong second quarter for international subscribers, indicating growth of 48.7%, wrote Michael Olson, senior research analyst at PiperJaffray in a note.
âNetflix is ââthe leader in a category that contains tremendous multi-year growth potential,â added Olson. Despite growing competition and unforeseen hurdles, Olson believes the market will support several big players and Netflix will continue to lead the way.
In addition to GBH Insights and PiperJaffray, stock research firm Monness, Crespi, Hardt & Co. also raised its price target for Netflix to $ 460 from $ 375, maintaining its âbuyâ rating.
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âGiven Netflix’s leadership position in the market, its increasing scale, rapid growth and subscription-based model, we believe investors will continue to pay a premium for the share,â he said. writes Brian J. White, analyst at MCH.
Netflix shares are up 111.0% this year, while Disney shares are down 1.3% and Amazon shares are up 48.4%. The S&P 500 SPX,
is up 3.2%, while the Dow Jones Industrial Average is down 0.1%.
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