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Netflix Target Up as JPMorgan Sees 'Linear-TV Disruption'

Netflix gets a price-target boost from JPMorgan as the company drives 'the ongoing disruption of linear TV.'

Netflix  (NFLX) - Get Netflix, Inc. (NFLX) Report is "a key beneficiary and driver of the ongoing disruption of linear TV," according to a JP Morgan analyst who raised his price target for the streaming service giant to $705 from $625 and affirmed an overweight rating.

Shares of the Los Gatos, Calif., company were up 0.2% to $608.10.

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"NFLX is a key beneficiary and driver of the ongoing disruption of linear TV," analyst Doug Anmuth said in a research note, "with the company’s content performing well globally and driving a virtuous circle of strong subscriber growth, more revenue, and growing profit."

The analyst said that Netflix's originals, such as "Clickbait," "He's All That," "Money Heist," "Outer Banks" and "Sweet Girl" were among the most popular U.S. titles from Aug. 18 to Sept. 6.

Anmuth said he expected Netflix to continue to benefit from the global proliferation of Internet-connected devices and increasing consumer preference for on-demand video consumption over the Internet. 

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He sees the company approaching 300 million paid subscriptions by 2025.

"We believe NFLX has considerable leverage in its model as higher subs have a disproportionately larger impact on profit against relatively fixed content costs," he said.

The price-target hike comes one day after Atlantic Equities analyst Hamilton Faber raised his price target on the streaming service to a Wall Street high $780 from $690 and kept an overweight rating.

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In July Netflix second-quarter results missed on earnings expectations despite reporting global net subscriptions ahead of estimates.

For the third quarter, the company said it expected to add 3.5 million new paid subscribers after adding 2.2 million in the same period a year ago. 

"We believe NFLX user trends continue to improve from 2Q levels and our analysis of [quarter to date] global downloads through August is tracking to 3Q net adds of about 2.7 million," Anmuth said, "below management's 3.5 million guide, but we expect acceleration in September on strong content and more favorable seasonality."