NEW YORK (TheStreet) -- Shares of Netflix (NFLX) rose 1.84% at $488.15 following RBC Capital Markets reiteration of its "outperform" rating on the subscription streaming video service, as it raised its price target to $600 from $530.
Netflix is undervalued based on its growth prospects in Europe, according to RBC analyst Mark Mahaney, Investors.com. reports.
While Netflix stock is up over 30% this year, RBC says that it has a lot of room to grow.
Earlier today, Netflix hit its all-time high of 489.29.
"...sentiment remains negative - Netflix has the highest short interest and lowest buy rating ranking among all the large-cap Net stocks - which creates additional opportunity," Mahaney said, adding "We don't want to overstate it, but Netflix may be the 'most hated' stock in the Internet sector. And this creates potential additional long opportunity for the shares."
Netflix now has 36 million U.S. streaming subscribers and 14 million international subscribers.
TheStreet Ratings team rates NETFLIX INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
"We rate NETFLIX INC (NFLX) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 7.3%. Since the same quarter one year prior, revenues rose by 25.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 134.69% and other important driving factors, this stock has surged by 61.63% over the past year, outperforming the rise in the S&P 500 Index during the same period. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
- NETFLIX INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, NETFLIX INC increased its bottom line by earning $1.85 versus $0.29 in the prior year. This year, the market expects an improvement in earnings ($3.90 versus $1.85).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet & Catalog Retail industry. The net income increased by 141.0% when compared to the same quarter one year prior, rising from $29.47 million to $71.02 million.
- The gross profit margin for NETFLIX INC is currently very high, coming in at 81.65%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 5.29% is above that of the industry average.
- You can view the full analysis from the report here: NFLX Ratings Report