Netflix Inc. (NFLX) soon could have it all figured out.
The media streaming company earned an optimistic five-year outlook raise from RBC Capital Markets this week as analysts hiked forecasts for both subscriber statistics and profit and loss numbers. Analysts predicted Netflix will amass a global subscription base of 235 million to 265 million by 2022, growing significantly from previous estimates of between 220 million and 250 million.
RBC also forecast that Netflix could tally an average revenue per user of between $12 and $14 by 2022, up from about $10.50 today. Also by 2022, Netflix can push its operating margins to between 15% and 30%. According to RBC, those financials could precipitate 2022 earnings of between $18 and $25 a share, up from RBC's previous estimate of between $14 and $22.
The increasingly bullish outlook on Netflix came after RBC examined the company's first quarter financials and conducted its 27th quarterly survey of more than 1,500 people in the U.S.
RBC found that Netflix was on track to tally record high second-quarter penetration levels. Analysts found that 55% of respondents watch Netflix, which was lower than the 60% that watched in March but up from 53% in May 2017. Netflix maintained a "significant lead" over Alphabet Inc. (GOOGL) subsidiary YouTube, Amazon.com Inc. (AMZN) and Hulu, all of which also dropped in May when compared to March.
"Amazon is showing the fastest penetration growth among streaming services, but we now have three years of data that shows AMZN Prime customers are more likely to also subscribe to Netflix," RBC wrote.
Of those who do subscribe to Netflix, 68% were "extremely" or "very satisfied" with the service, a trend keeping in line with the last four quarters. About 84% of subscribers said they were "not at all likely" or "slightly likely" to cancel their Netflix account in the next three months. That's a slight drop from the 88% average in the last five quarters, but RBC said the statistic remains "intrinsically positive" and that the shift could be a lag impact from Netflix's recent price increases.
A record-high 55% of subscribers said they think Netflix's content has "improved" over the last year vs. just 7% who think content has "worsened." Netflix's "Stranger Things" remains the most popular original show on the service.
Netflix also has begun to flex its muscles in Europe. RBC found that 52% of French respondents in their eighth annual survey of more than 2,000 Europeans were "extremely" or "very likely" to pay for content, up from 39% a year ago. In Germany, 47% were willing to pay, up from 29% last year. About 93% of French and 90% of German subscribers said they were "extremely" or "very" satisfied with their Netflix services.
Netflix stock climbed 0.51% to $353.42 at the market open on Friday, June 1. Shares are higher 84% since the start of the year.
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