Netflix, Inc. (NASDAQ:NFLX)’s stock price is poised to continue its northern ascent, after an investment bank north of the border greatly upgraded their target price on it. Canadian investment bank RBC Capital Markets maintained their ‘outperform’ rating on Netflix, Inc. (NASDAQ:NFLX) today while boosting their target price on the stock from $530 to $600.
Discussing the upgrade on CNBC today, Jim Cramer pointed to the fact that Netflix, Inc. (NASDAQ:NFLX) is defying the perception of how popular the service would be in Europe, and that’s leading to the increased optimism about the stock.
“This is a note, one of the best notes out there, I think from Pacific Crest; they are now launching in Germany, France, Belgium, Switzerland, Austria, Luxembourg in late September. And you know what, people apparently like Netflix more over in Europe than they like it here. They like it more, so that’s one of the things people have misjudged; that the take rate for Netflix is higher over in Europe. That’s a surprise, and that’s what’s behind these rapid upgrades that you’re seeing,” Cramer said.
Cramer and David Faber compared Netflix, Inc. (NASDAQ:NFLX) to Tesla Motors Inc (NASDAQ:TSLA) in terms of their stocks being heavyweights of growth that the market is currently clustering around, which Cramer admits is not ideal.
In their note on Netflix, Inc. (NASDAQ:NFLX), RBC Capital analyst Mark Mahaney cited three key factors that led them to upgrade the stock’s target. Firstly, the launch in Europe and the expectation that Netflix, Inc. (NASDAQ:NFLX) could generate as many as 60 million subscribers by achieving just 20% penetration rates in the top-20 broadband markets outside the U.S and China, many of which are in Europe. Secondly, the satisfaction of Netflix, Inc. (NASDAQ:NFLX) consumers in the U.S according to RBC’s own polling results, showing that 65% of customers are very satisfied with the service. Lastly, a separate poll in the U.K showing the same customer satisfaction and falling rates of attrition.
Netflix, Inc. (NASDAQ:NFLX) is up just under 1% on the day in afternoon trading, down from a 2% gain earlier in the day. The stock has set a new record high today of $488.89, but still rests 18% below RBC’s target.