Piper Jaffray: Netflix Still The Best (NFLX)

Piper Jaffray is maintaining its Overweight rating and $140 price target on Netflix, Inc. NFLX as the online entertainment company continues to gain subscribers. In the research note, Piper Jaffray writes, "The 2nd month of web traffic data from ComScore suggests that Netflix sub adds are tracking essentially in-line with our estimates. ComScore data for Netflix.com for the first 2 months of Q3 shows a Q/Q acceleration of 9 percentage points (up 43% y/y in the first 2 months of Q3 vs. up 34% in all of Q2). We are modeling for y/y growth in gross sub adds to accelerate by 14 percentage points in Q3 (72% y/y in Q3 vs. 58% y/y in Q2)." Piper Jaffray goes on to write, "Metrics Deteriorate Y/Y In CY11. We believe our model could prove to be conservative. We are modeling for all key metrics (net sub add growth, GM, churn, SAC, ARPU) to deteriorate from CY10 to CY11. However, if Netflix sees continued success in the adoption of the Watch Instantly platform, these key metrics (excluding ARPU) could improve in CY11." Shares of Netflix gained $4.21 yesterday, a gain of almost 3% to close at $146.00.