Netflix Has 'Tremendous Traction,' Despite Stock Volaility: Analyst

What a tech media comeback story.

About 1 1/2 years ago, Netflix shares were getting hammed after the subscription-based media company announced a major price hike, and changes to its subscription plans. Fast forward and Netflix today is within shooting range of $200 a share. They've successfully weaned their business model away from antiquated DVDs to creating content and streaming programming across multiple platforms.

"Today it's a streaming business," said Barton Crockett, media and entertainment analyst at Lazard Capital Markets on CNBC Monday. Crockett has a buy rating on the stock and a $200 price target. Shares recently were trading around $184.

Content Is King

In the U.S., "these guys are getting tremendous traction with consumers," Crockett said. Surveys show about 40 percent of consumers have Netflix or want to get the service, Crockett said. "And that number keeps growing every time we look at it."

Netflix more recently has become a legitimate content creator in Hollywood. The company is spending ballpark $1.5 billion domestically on content, Crockett estimates. "That's nearly as much as HBO, that's a lot more than Discovery. It's a lot more than Starz. They're spending enough to have critical mass of content that people want to see," the analyst said.

Going forward as spending levels off and subscribers increase, Netflix's margins could reach the 40 percent to 50 percent margins seen at premium networks such as HBO and Starz. Netflix current margins are in the low single digits.

(Read More: Netflix Allows US Users to Connect Accounts to Facebook)

Reed Hastings, CEO of Netflix
Getty Images
Reed Hastings, CEO of Netflix

Stock Headwinds

Amid all the good news, Netflix shares have been volatile, swinging from roughly $52 and $197 a share within a year. "My biggest concern, I guess, is just the volatility in the stock," Crockett said.

Beyond stock price, there's media competition of course including, which also offers streaming content. But Netflix more recently has morphed from being a catalog of content to a producer of content such as the successful "House of Cards," an online series exclusive to Netflix.

The company also penned an exclusive deal with Disney that goes into effect in a few years. "This looks a lot like what HBO has put together," Crockett told CNBC.

Reed Hastings: The New Media Mogul

Netflix CEO Reed Hastings, who hails from Silicon Valley, has created an Internet-era TV network, Crockett said.

"TV networks have higher margins than Netflix has today. So I think over time, they'll be more like the financials that we see at TV network companies," Crockett said.

Hastings, also Netflix's founder, is decidedly richer given the wild stock swing to the upside. CNBC's Robert Frank reports Hastings' net worth today is around $605 million compared to $217 million in October 2011, after the company announced a badly-received pricing hike and the stock cratered.

By CNBC's Heesun Wee; Follow her on Twitter @heesunwee