Shares of the Los Gatos, Calif., company at last check were little changed near $438. The price target indicates 19% upside from Netflix's Wednesday closing price.
Analyst Alex Giaimo said in a note to clients that Netflix's "addressable market is vastly underappreciated, providing significant runway for continued double-digit subscriber growth."
"We estimate the addressable market will grow to over 850 million, driven by a combination of broadband households and 'mobile only' users," he said.
"Our model assumes just 28% international penetration by 2023, vs our estimate of 18% today (we assume steady-state U.S. penetration at 65%)."
Giaimo also cited Netflix's improving margins with a path to sustained positive free cash flow, and the company's "proven ability to create value under evolving landscape."
Netflix has been among the top-performing tech stocks during the coronavirus pandemic.
"Netflix has been at the forefront of multiple industry evolutions, allowing the company to sustain significant first-mover advantages (we believe the mobile-only offering could be the next leg)," Giaimo said.
"Furthermore, we believe fears of rising competition impairing subscriber growth/long-term pricing power are mostly overblown."
The analyst noted that the majority of U.S. cable consumers still pay more than $100 a month for their service, more than the combined value of five to seven subscription video-on-demand services.
The monthly cost of Netflix is substantially lower than other forms of entertainment, Giaimo said, while providing more entertainment hours.
The analyst said that valuation is the biggest hurdle, "and we acknowledge we are initiating with the stock near all-time-highs."
"We expect near-term choppiness given the covid pull-forward in demand and associated elevated expectations, but we advise owning shares longer-term and adding on pullbacks," Giaimo said.