This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Netflix Jumps on Love From Goldman Sachs (Update 1)

Updated from 9:35 a.m. EST to provide executive comments regarding hours watched in the tenth paragraph.

NEW YORK ( TheStreet) -- Netflix (NFLX - Get Report) is getting some love this morning from Goldman Sachs as the investment bank raised its earnings estimates and price target on the movie provider citing improved subscriber growth and margin expansion.

Shares of the Los Gatos, Calif. movie provider finished up 4.18% to $173.01 to extend its gain this year to 86.7% compared to 11% for the Nasdaq.

Analyst Heath Terry raised his price target to $184 from $125 but kept his "neutral" rating explaining that Netflix may benefit from increased distribution, an enhanced content library and larger international presence.

"As the ecosystem grows and Netflix's model evolves, we believe the addressable market of subscribers is better defined by the number of "connected consumers" than households," Terry wrote in his note. The Goldman Sachs analyst lowered his earnings estimate for the year ending 2013, moving to $1.12 per share from $1.41, but 2014 and 2015 estimates were raised significantly, moving to $3.72 and $6.07 per share, up from $2.62 and $3.81 per share, respectively.

Netflix is expanding the number of devices where its services are carried, ranging from Apple (AAPL - Get Report) iPhones, iPads to Microsoft's (MSFT - Get Report) Xbox, as well as smart TVs.

Terry notes that the movie provider could see even further penetration as the number of devices increases. He says there are 132 million potential domestic customers, and sees that growing to 206 million potential customers in the next five years. Currently, Netflix is estimated to have 22.8 million domestic streaming subscribers, and Terry believes that could grow 165 basis points for the next five years to 53 million users.

Importantly, Netflix's streaming service is the real driver of growth. As more smart TVs come to market and consumers take advantage of their Internet connectivity, streaming has the potential to drive future sales and profits.

"We believe those with Smart TVs actually connected to the Internet (around 50% of total installed Smart TVs) are the most likely to sign up for a service like Netflix, as TV/Video consumption is the key use case for the device and the Internet connection indicates a real intent to consume online video content," Terry penned in his note.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.74 0.00%
MSFT $49.87 0.00%
NFLX $90.03 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs