Netflix Soars on Analyst Upgrades

Is there no limit to Netflix's growth?


On the heels of yesterday's earningsthe stock is up around fifteen percent today.

And it's not just the higher-than expected subscriber numbers and earnings: a slew of analysts have upgraded the stock and their price targets today.

These analysts are not spooked by a sky-high valuation - Netflix's current p/e is 79. (Track Netflix here.)

The boldest call on Netflix comes from Pacific Crest's Andy Hargreaves, who raised his rating to Outperform, giving the stock a $270 price target. Right behind him is Canacord Genuity's Heath Terry - he gives the stock a $250 price target. In a note Terry writes: "With strong subscriber and revenue growth, substantial operating leverage, and significant incremental growth opportunities, we believe Netflix will continue to exceed the market's expectations." Terry sees the real growth coming from streaming via Netflix-enabled devices like connected TVs, Blu-Ray players, and smart phones.

A number of other analysts upgraded their stock targets, without going quite so far.

Piper Jaffray's Michael Olson reiterated his Overweight rating and raised his price target to $240 from $217.

$224 is the price target JP Morgan's Imran Khan upgraded to, as he pushed up his estimates for the site. He's counting on the company's stronger-than-expected subscriber growth to continue. Caris & Company picked the same price target of $224 for Netflix today as it raised its rating on the stock. ThinkEquity's Atul Bagga raised his rating to Buy from Hold.

Even one analyst who's been more cautious is getting on board-- Morgan Keegan upgraded the stock from Underperform to Market Perform, raising his price target to $220.

That's not to say that there isn't still plenty of skepticism. Wedbush Securities Michael Pachter says the company's lack of full guidance for the year is reason for concern, and he expects content costs to rise by $100 million this year. Citigroup's Mark Mahaney, who like Pachter has a hold on the stock, points to the company's high valuation, the risks of expanding overseas, and competition to Netflix's growing streaming business.

For today, the bulls are winning.

Questions? Comments?