A new wave of streaming competition may be coming for Netflix, Inc. (Nasdaq: NFLX), but Wall Street isn’t worried. A day after a judge approved the merger of AT&T, Inc. ( T) and Time Warner, Inc. ( TWX), Goldman Sachs raised its price target for NFLX stock by $100.
Netflix shares have skyrocketed 92.4 percent in 2018 and are now up an incredible 1,150 percent in the past five years. However, Goldman analyst Heath Terry says the market still isn’t fully appreciating Netflix’s value.
“We believe the growing content offering and expanding distribution ecosystem will continue to drive subscriber growth above consensus expectations,” Terry says.
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Terry has reiterated his “buy” rating and raised Goldman’s price target for NFLX stock from $390 to $490, implying roughly 33 percent additional upside from current levels. According to FactSet, Goldman’s new target is the highest among the 36 analysts who currently cover Netflix.
Goldman estimates Netflix will add 32.5 million net subscribers in 2019, well above consensus analyst estimates of 26 million subscribers.
We believe Netflix’s ability to spend significantly more on customer acquisition while still producing operating margin expansion for the full year, “will allow the company to drive additional subscriber growth, particularly in markets where the company’s brand presence isn’t as strong as it is in the U.S.,” Terry says.
Terry’s bullish take is likely reassuring to Netflix investors after the AT&T buyout of Time Warner was given the green light on Tuesday. In April, AT&T launched a new $15 per month streaming service called AT&T Watch, and the service will soon get a major content boost given the Time Warner merger was approved with no stipulations.
At the same time, Walt Disney Co. ( DIS) and Comcast Corp. ( CMCSA) are vying for the content of Twenty-First Century Fox Inc. ( FOXA). GBH Insights head of technology research Daniel Ives says the winner of the potential Fox bidding war will be a serious streaming threat.
“Comcast and [CEO Brian] Roberts will likely throw their hat in the ring in its quest to battle [Disney CEO Bob] Iger and Disney for these unique entertainment assets that will propel the eventual winner to become a major streaming player and content-rich behemoth for years to come,” Ives says.
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GBH Insights has a “highly attractive” rating and $400 price target for NFLX stock.
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Goldman Gives Netflix, Inc. (NFLX) Stock Its Highest Target Yet originally appeared on usnews.com
