Goldman: Netflix a 'Buy' on Latin America Expansion
Latin America likes U.S. entertainment, and that means Goldman Sachs continues to like Netflix because it is expanding into that region and the Caribbean.
Goldman said Monday it reiterated its "buy" rating on Netflix and increased its six-month price target to $330 from $300 after Netflix said it is launching in 43 countries throughout Latin America and the Caribbean this fall.
Goldman also raised its estimate on 2012-2013 earnings to $6.96 to $9.65 per share from $6.87 to $8.95 a share.
Netflix’s second-quarter 2011 international loss guidance of $50 million to $70 million includes the launch across all of these territories, said Goldman.
According to the analyst, not only is U.S. content very popular in Latin America, but the region has a large and growing number of broadband households and a lack of competition.
"We see Netflix as a competitor for PayTV, given penetration of around 25 percent," Goldman said.
About the only thing that could hold that expansion back is the region’s slow broadband speeds and small number of DVRs sold so far, but Goldman said that problem is not insurmountable.
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Goldman Sachs expects to receive or seek compensation for investment banking services in the next three months and makes a market in securities of Netflix.