Credit Suisse Raises Estimates After New Netflix Offering

Credit Suisse has published a research report on Netflix, Inc. NFLX after the company announced its new streaming-only subscription offering. In the report, Credit Suisse writes "We boosted our estimates and raised our target price to $155 (from $140) based on pricing increase and expected cost savings from the introduction of a U.S streaming-only service. We are updating our original analysis of a U.S. streaming-only service (published 10/14/10), largely to account for a pricing increase for bundled subscribers. NFLX launched its streaming-only offering today for $7.99, while its bundled plans (DVD plus unlimited streaming), the 1-out and 2-out plans pricing increased by $1. We are raising our estimates given an increase in the blended ARPU, with the pricing increase for the bundled service more than offsetting the expected uptake of the lower priced streaming-only service and also given cost savings for lower expected DVD shipments, which we think will be somewhat offset by NFLX reinvesting savings on streaming content." Credit Suisse maintains its Neutral rating but has raised the price target from $140 to $155. Netflix closed yesterday at $188.32.