Netflix's revenue growth is all about its overseas growth, Needham & Co. analyst Laura Martin said Thursday.
Shares of the streaming video company rose more than 17 percent Thursday after it announced earnings that beat estimates, as it added more subscribers than analysts had anticipated.
Netflix brought in 2.5 million subscribers overseas in the second quarter and nearly a million more in the United States, bringing its total to 65 million accounts.
"We estimate that they have a payback period offshore about half as long, so twice as profitable as in the U.S.," she told CNBC's "Squawk on the Street." "Netflix is going to go from 50 countries to 200 countries penetration in the next 18 months. We think that's what's driving the stock price up."
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Martin said investors stand to reap not only subscriber upside but an unexpected pricing boost following the company's earnings call comments suggesting they would start to raise prices overseas.
"Pricing up globally 5 percent—that's the first time they've ever talked about pulling the lever of raising prices, not so much in the U.S. but offshore," she said. "They have 31 tiers worldwide in all their countries, and they're going to start raising prices selectively."
Digital markets tend to be winner-take-all, and Netflix has an "enormous" lead because it aggregates premium content and moved aggressively overseas to get ahead of would-be competitors, Martin added.
Netflix said in its conference call that it may push off its move into China beyond next year due to difficulty securing government permission.
That will only be an issue if one believes local programming is more important than U.S. content, Martin said. She noted Netflix launches in most countries with a 65-35 split between U.S. and local programming.
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"If you think China's local programming is super, super important then Alibaba might get traction," she said. "It's my view that it's U.S. global programming that's important, and therefore Netflix has a huge advantage over anyone in China because they have global deals with the big seven studios in the U.S."
Needham raised its price target 15 percent from Wednesday's close to $1.11.
"Growth is very hard to find in this market, and this company has a three-year trajectory of growth, so we would expect growth investors to continue to be attracted to this stock," she said.
Netflix is also set to raise its subscription fee by $1 for some customers in the United States next year. Mark Mahaney, lead Internet analyst at RBC Capital Markets, said that increase presents a risk, but he believes Netflix has the pricing power to carry out the hike successfully.
The company can increase its average revenue per user not just though naked price increases, but also by offering different tiers of service, he said.
"We see modest upside in the shares, but I want to make sure we don't miss upside by not owning the stock," he told CNBC's "Squawk Alley." "They're going to be adding more subs in the U.S. this year than last year. That tells you that Netflix in the U.S.—its most mature market—is still in first half innings."
Factoring in international growth as well, RBC believes Netflix can run another $10 based on earnings power, Mahaney said. Shares of Netflix were trading just above $115 on Thursday.
DISCLOSURE: Neither analyst nor their families' own shares of Netflix. Their firms do not own a greater than 1 percent share of the stock or provide investment banking services to Netflix.