Guggenheim: Netflix Subscriber Penetration Will Outpace Street Expectations

Guggenheim turned incrementally bullish on Netflix, Inc. NFLX Wednesday, lifting its price target 15 percent above the equity's present trading level. 

The Analyst

Guggenheim analyst Michael Morris maintained a Buy rating on Netflix and raised the price target from $360 to $420.

The Thesis

Netflix's subscriber penetration should significantly increase based on two main drivers, Morris said in a Wednesday note: 

• The product’s consumer value in both price and utility.
• An efficient model that supports quality content creation, distribution and monetization.

Netflix has continued to execute long-term success this quarter, while growth in both market penetration and consumer engagement has been evident, Morris said. (See his track record here.) 

“Over the past several months the company has expanded several initiatives that we see creating additional value." 

The launch of original programming in India; the hiring of former Walt Disney Co DIS exec Christie Fleischer as global head of consumer products; and ongoing platform upgrades are key drivers for Netflix's brand and Guggenheim's thesis, the analyst said. 

The streaming service's business model, unique set of core values and consumer value propositions are primed for success, Morris said.

“We encourage investors to read the Netflix Culture description and description of the use of data science in the art of content production for a deeper understanding of important ways that Netflix has a stated commitment to integrity and excellence." 

Price Action

Netflix shares were down 0.69 percent at $365.12 at the time of publication Wednesday. 

Related Links:

Infographic: 5 Fun Facts About Netflix

Some Perspective On Netflix's Subscriber Figures

Photo courtesy of Netflix.