Bank Of America: After 100% Gain, Netflix Has More Upside Ahead

Shares of Netflix, Inc. NFLX have gained more than 100 percent since the start of 2018, but there is room for more upside, according to Bank of America Merrill Lynch.

The Analyst

Bank of America's Nat Schindler maintains a Buy rating on Netflix with a price target lifted from $352 to $460.

The Thesis

Netflix is expected to be the dominant streaming video provider in nearly every market in which it operates, Schindler said in a Wednesday note. (See Schindler's track record here.)

The company will achieve this status given its strong execution, encouraging secular trends and high demand for streaming content, the analyst said.

Netflix's global subscriber base should reach 360 million by 2030, Schindler said, which represents 54 percent of 2021 estimated global pay TV subscribers excluding China and just 35 percent of global broadband households excluding China. These figures are conservative and imply a "reasonable" compounded annual growth rate of 8 percent for the next 13 years, he said.

The analyst's revised $460 price target is based on a domestic subscriber forecast of 80 million in seven years, which values the domestic business at $102 per share. The international segment is valued at $357 per share, and this is based on 280 million subscribers in 13 years and $1 in value per share assigned to the DVD business, according to BofA.