Netflix shares were trading higher Friday, following upbeat analyst comments on the online streaming service. Of particular note, is Barclay’s comment that Netflix could become the 2nd biggest media company in three years’ time.
By 1540 BST, Netflix shares were 1.16% higher at $219.92. Mirroring many other prominent US stocks, Netflix shares have had a strong start to 2018.
Barclays positive on Netflix outlook
Barclays analysts have initiated the Netflix stock at overweight, with a price target of $245. Barclays analyst Kannan Venkateshwar’s research note on Netflix to clients, was full of praise for the streaming media business.
“Netflix bull case at the core is relatively simple — if subscriber growth is faster than content cost growth over time, it could become one of the most successful media companies. We believe this is possible," Venkateshwar wrote.
"Our view is supported by Netflix's global footprint and access to ~550mm broadband subs, demonstrated pricing power, growing content library, changing mix towards local content, and its increasing 'stickiness' due to multiple seasons of established originals,” the analyst wrote.
“In our opinion, in the next 3-5 years Netflix is likely to become the second biggest media company by revenue (ignoring studios and theme parks), next only to Disney,” Venkateshwar added.
Netflix impresses others, too
Barclays isn’t the only group to be impressed with Netflix plans and potential.
MKM Partners said in a recent research note that the long-term argument for Netflix is “quite simple”. The research group has a price target of $245 on the Netflix stock, in line with Barclays.
Netflix “has the most potential for market cap appreciation of the FANG stocks over the next several years,” wrote MKM. “We still think there is significant opportunity in the years ahead.”
Meanwhile, analysts at Citi have suggested that Netflix could be a potential takeover target for Apple.
Citi analysts Jim Suva and Asiya Merchant, said in the wake of the US tax cut being passed, there is a 40% chance that Apple could buy Netlfix.
“The firm [Apple] has too much cash – nearly $250 billion – growing at $50 billion a year. This is a good problem to have,” Suva and Merchant said in their note. They add a Netflix purchase could only require around a third of that cash.