Netflix stock is set for even more gains with budding interest from consumers in Asia, RBC Capital Markets advised clients on Thursday.
Top technology analyst Mark Mahaney told clients that the firm's research in Japan and other Asian nations revealed a growing willingness by consumers to pay for premium content.
"The sun appears to be finally rising in Asia," Mahaney wrote to clients. "Japan, which Netflix entered in October 2015, is one of the largest markets the company has ever entered and one of the most significant. … Of our Japan survey respondents, 63 percent indicated that they were 'Extremely' or 'Very satisfied' with the service vs. 65 percent last year. This remains lower than the results we've seen in other countries, but is a material improvement from 52 percent two years ago."
Shares of Netflix fell 0.82 percent Friday.
Japan represents a crucial first step in Netflix's broader expansion throughout Asia, Mahaney said. During a fourth-quarter earnings call, Netflix CEO Reed Hastings commented on the company's performance in Asia.
"We definitely are seeing success, as you all know, and your channel checks and other things tell it in the different markets," Hastings said at the time. "And when we compare it to Latin America several years ago, we're very pleased with the progress that we're making through India, through Southeast Asia, through Japan."
In light of the potential for growth in Asia, Mahaney increased his price target on shares of the video streaming company to $350 from $300, representing 9 percent upside from Thursday's close.
Source: Google Trends, RBC Capital Markets
RBC research also found that Google Search Trends in Japan, South Korea, Thailand and several other Asian nations have all seen steady increases in the frequency of "Netflix" queries.
"On the whole, results were very positive, showing consistent upwards trends over the course of 2017 and into 2018," Mahaney said. "2017 appears to have been an early pivot year for Netflix in Asia and 2018 is showing good momentum so far."