Netflix (NFLX) - Get Report is "a key beneficiary and driver of the ongoing disruption of linear TV," according to a J.P. Morgan analyst, who raised his price target on shares of the video-streaming giant to $628 from $615.
Los Gatos, Calif.-based Netflix was trading down slightly Monday to $485.
J.P. Morgan analyst Doug Anmuth, who reiterated his overweight rating on the shares, said in a note to clients that Netflix announced monthly price increases in the U.S. and Canada in October.
The analyst said that "while each successive price increase should generally feel a bit more friction," he did not expect this price increase to pressure net subscriber additions much because the basic plan remains unchanged at $8.99.
Also, Anmuth said the latest price increase comes during the fourth quarter, "a period of stronger content, colder weather" and renewed coronavirus pandemic restrictions in the U.S., all of which likely will extend into the first quarter.
"We believe NFLX is a key beneficiary and driver of the ongoing disruption of linear TV, with the company’s content performing well globally and driving a virtuous circle of strong subscriber growth, more revenue, and growing profit," Anmuth said. "We expect NFLX to continue to benefit from the global proliferation of Internet-connected devices and increasing consumer preference for on-demand video consumption over the Internet, with NFLX approaching 300M global paid subs by 2024."
Netflix, Anmuth added, "has considerable leverage in its model as higher subs have a disproportionately larger impact on profit against relatively fixed content costs."
The analyst said that from Oct. 30 to Nov. 18, Netflix's "Holidate," "The Crown Season Four" and "The Queen's Gambit" were among the most popular titles in the U.S. "Holidate" was ranked No. 1 for four days and "The Queen's Gambit" was No. 1 for 13 days.