An Analyst Thinks Netflix Will Have 100 Million People Overseas Paying to Watch Movies
Shares of Netflix (NFLX) - Get Report were moving lower during Tuesday morning trading despite investment firm Piper Jaffray reiterating its "Overweight" rating on the video streaming service's stock.
Piper Jaffray analyst Michael Olson hiked his price target on Netflix to $215 from $198, representing a 19% increase from Monday's close.
Olson expects the company's international subscriber base to double over the next three years from its current level of 52 million.
"International growth is clearly the primary focus of NFLX investors; one of the most consistent concerns we hear, regarding ongoing growth potential, is the challenge the service will face gaining adoption in lower income markets," Olson noted. "Our analysis suggests that Netflix can reach 100M international subs by 2020, with zero or very minimal penetration in lower income international markets."
If Netflix can achieve just 25% share of the upper-income segment in global markets, it can reach the 100 million level with no share of the lower income demographic, Olson explained.
"Based on this, we are increasing our international subscriber estimate for 2020 (ending Q4) to 100M and believe this could still be conservative," he wrote.
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