Wall Street resets targets on Netflix after subscriber growth dazzler

• Netflix (NASDAQ:NFLX) added 5.3M new subscribers in Q3 and expects to add another 6.3M in Q4 as growth continues to explode. For the moment, the majority of analysts seem relaxed on the expected bump in content spending for the company in 2018 to a range of $7B to $8B.
• Pivotal Research (Street-high PT of $270) expects higher prices and less churn out of Netflix.
• FBR (Neutral, PT upped to $207): Notes that the streamer "does not see any signs of diminishing returns on rising content spending."
• KeyBanc (PT hiked to $230): "We continue to recommend owning Netflix. 3Q results and 4Q guidance suggest Netflix is accelerating away from competitors and building pricing power while driving better-than-expected subscriber growth. This combination suggests greater near-term earnings potential and the likelihood for a longer period of above-average growth than we previously expected."
• JPMorgan (NYSE:JPM) (Overweight, PT lifted to $242): "We believe the content slate in 4Q is strong led by second seasons of both Stranger Things and The Crown, the second NFLX original David Fincher series entitled Mindhunter, & the Will Smith original film Bright."
• Morgan Stanley (NYSE:MS): "Our new $235 price target (vs. prior $225) implies ~12.5x our 2027E EBITDA discounted back to mid-year 2018."
• Piper Jaffray (Overweight, PT lifted to $240): "We apply slightly higher multiple of 45x our upwardly revised 2020E EPS of $6.45 (previously 42x), discounted back 2 years at 10% (same discount period & rate). We believe our multiple is realistic given we expect >70% EPS growth in 2020."
• Sources: Marketwatch.com, CNBC and Bloomberg.
• After some strong gains in the AH trading session that put Netflix shares above their all-time high, they are now down slightly 0.20% at $202.30 heading into the market open.
• Previously: Netflix misses by $0.03, beats on revenue (Oct. 16)
• Previously: All-time high for Netflix after subscriber growth shines (Oct. 16)
• Now read: Love It Or Hate It, Netflix Continues To Deliver

Original article