Markets

Here's what major Wall Street analysts think of the Netflix price increase

VIDEO3:1603:16
Netflix just raised prices — Three experts debate what it means for the stock

Netflix announced Tuesday it is raising prices on customers for the fourth time in its history.

Shares took off after the company said the increase will take effect right away, with the price jump expected to be between 13 and 18 percent.

The stock rose to near its high of the day as Wall Street analysts largely cheered the move in notes to clients, saying it showed confidence from management in the company's upcoming content releases.

Stifel analyst Scott Devitt headlined with, "Pricing Wind Beneath its Wings." He said the increase puts the service about in line with HBO Now and Hulu's premium service and that the company will be able to "continue its recent pace of domestic price increases every 16-18 months."

Goldman Sachs analyst Heath Terry hiked his price target to $420 from $400.

Here's what some of the major analysts have said so far:

Stifel - Buy rating

"We are bullish on the company's ability to execute the pricing increase, though note in the near-term, domestic subscribers churn may tick up as the company introduces the new pricing levels to existing members. ... We see the potential for cautious 1Q guidance on domestic paid net subscriber additions due to this factor ... In the U.S., Netflix's new pricing compares to HBO NOW at $14.99 per month and Hulu's ad free product at $11.99. We believe it is possible Netflix will continue its recent pace of domestic price increases (every 16-18 months), as its Standard plan is still $2 below HBO's product with a significantly larger content offering."

Credit Suisse - Buy rating

"Investors will likely view this above-Street estimate increase quite positively, bolstering confidence in subscriber trends, pace of revenue growth and ability to achieve guidance for margin gains."

SunTrust - Buy rating

"We noted in our recent 'NFLX Monthly' note that we expect the content slate to strengthen into mid-year and to 'watch for tactical price increases into the strengthening content slate.' ... We view the read-through as positive as it relates to the company's confidence in the content slate and subscriber trajectory in 2019."

RBC - Outperform rating

"We believe this action has a high probability of success, further fueling the Netflix flywheel. ... The simple point here is that this price increase – if successfully implemented – can generate a material boost to NFLX's profitability (we estimate $2.6B in Operating Profit in FY19) and/or help cover its Cash Content Costs, which we estimate at approximately $14B in FY19."

Piper Jaffray - Buy rating

"We believe the primary determinant in the ability to raise price is subscriber perception of content quality. ... In Nov-18, we surveyed >1,100 U.S. subscribers and found that 71% of them feel Netflix content has improved in the past year. ... We believe, as long as the vast majority of subs perceive that the service is improving, Netflix will be positioned to periodically raise prices."

Goldman Sachs - Buy rating

"We believe that these price increases reflect the incremental utility that subscribers see as hours of consumption per user grow with the growth in Netflix's content library and distribution ecosystem... While any price increase, particularly one this significant, is likely to be met with increased churn, we believe the value Netflix offers to subscribers and the strong content slate in the year ahead will largely offset that."