Piper Jaffray Reiterates Raises Price Target on Netflix (NFLX)

Piper Jaffray is out with a research report this morning, where it reiterates its overweight rating on Netflix Inc. NFLX; it also raised its price target to $156.00, from $140.00. The PJ analysts said that, in the last two months, through the Relativity Media, EPIX and Millennium deals, Netflix has positioned itself to move from a provider of library streaming titles to become a primary source of subscribers' new release content online, which they expect will push subs to use Watch Instantly in favor of DVD by mail. They analysts added that they believe this transition will positively impact GM, churn and SAC and are, therefore, adjusting those metrics in their model. While they are still modeling for all Netflix key metrics, including sub add growth, GM, churn, SAC, and ARPU, to deteriorate in CY11 vs. CY10, they believe this may prove conservative. As for valuation, the analysts noted, “Maintain OW and raising target from $140 (38x CY11E EPS) to $156 (40x CY11E EPS). Our revised multiple is in line with avg CY10 (39%) & CY11 (41%) EPS growth, which we believe is warranted given competitive environment and device & content deals.”