Netflix Binge: BofA Says Streaming Service's Momentum Backed By Subscriber Growth, Original Content

Bank of America Merrill Lynch analysts are expecting Netflix NFLX to continue its momentum in 2018. The company is set to report fourth-quarter earnings Jan. 22. 

The Analyst

BofA analyst Nat Schindler reiterated a Buy on Netflix with a $233 price objective. 

The Thesis

Multiple factors keep Netflix strongly positioned and competitive in the growing streaming content market, Schindler said: 

• Subscriber base growth, including further expansion into international markets.
• Continued development of original content.
• A growing market for on-demand video streaming
• The capacity to deal with the rollback of net neutrality and other regulatory factors.

Since Netflix’s 2016 launch into 130 new countries, the company has seen strong growth in international subscriptions, a trend BofA projects will continue. Netflix could reach 78.7 million international subscribers in 2018, Schindler said. (See the analyst's track record here.) 

Netflix plans to release 80 films in 2018 in a variety of genres, Schindler said. 

On the net neutrality front, Netflix’s long-term agreements with ISPs could shield the company from the consequences of the FCC’s decision, the analyst said. 

BofA projects 2018 revenue of $15.4 billion and EPS of $1.88 for Netflix, above the Street revenue estimate of $15 billion but below the Street EPS estimate of $2.28. 

Price Action

Netflix closed Tuesday down 1.29 percent at $209.31. 

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Photo courtesy of Netflix.