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Netflix, Inc. (NFLX) In China & Reasons For $900 Price Target By Barton Crockett

Netflix, Inc. (NASDAQ:NFLX) stock has surged by more than 75% in 2015. Netflix, Inc. (NASDAQ:NFLX) stock is hitting new highs every day and has even crossed the $600 per share mark for the first time on Friday. Meanwhile news emerged that Netflix, Inc. (NASDAQ:NFLX) is all set to take its content into China, which is a huge market in itself. Almost all the analysts and investors are very optimistic about the streaming company stock and some analysts has even set hefty price target on this stock. Senior analyst at FBR Capital Markets, Barton Crockett talked on CNBC about Netflix, Inc. (NASDAQ:NFLX) getting into China and the growth opportunities associated with it. Crockett’s firm has an ‘Outperform’ rating on Netflix stock with a staggering price target of $900.

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Crockett said that Netflix is on fire right now and he feels that the consumers love its service. He mentioned that more than half of the consumers would opt to drop Pay TV over the Netflix’s service. He thinks that Netflix is going to go vertical in the earnings since the contents can easily grab consumers in any market around the world. He feels that Netflix would concentrate on building the consumer base at the moment post which he thinks that the earnings would grow significantly for Netflix.

Crockett mentioned that Netflix is at the forefront of change in the home entertainment.

“[..] I think that these guys are going to be going vertical in earnings. I mean each million subscribers they add drops a $100 million to the bottomline. […] They have pricing leverage, each buck drops another $750 million to the bottomline. So I think after building up scale we are going to see this company go vertical in earnings and you want to own that. This company is really at forefront of the change in home entertainment,” Crockett said.

News start to emerge about Netflix venturing into China. Chinese market might not be the same for Netflix as the drop in bottomline might be very different. He said that Netflix would enter Chinese market in a JV. He pointed out that China has double number of broadband homes than United States. He said that the street has been conceptually expecting this for a long time, but he feels that no one has accounted for this growth in their numbers. There is a general opinion that as Netflix keeps growing, the content creators might start to charge them more, which might cut the margins for Netflix. Crockett thinks that Netflix invests in contents to grab more subscribers. He thinks that they must continue to do that to grow further globally.

Disclosure: None

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