Netflix shares head north as BofA cites 'strong runway' for subscriber growth
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Netflix (NASDAQ:NFLX) shares climbed more than 3% Tuesday as Bank of America analyst Jessica Reif Ehrlich reinstated coverage of the streaming TV kingpin with a buy rating and $370-a-share price target.
Ehrlich said that even with competition growing, Netflix (NFLX) maintains a "leading position within the still burgeoning shift toward non-linear video viewing," and has a "strong runway for subscriber growth outside of the U.S."
Netflix (NFLX) has seen its subscriber growth rates slow down somewhat, but Ehrlich said that the company still has some cards to play that should boost its subscriber numbers going forward.
"We believe [Netflix's] efforts to improve monetization via a value-oriented ad tier and significant conversion of password sharers has the potential to drive operating [and] financial" gains, Ehrlich said, in a research note.
In November, Netflix (NFLX) launch what it is calling "Basic With Ads", a subscription option that costs $6.99 a month that comes with advertisements. It is the first time Netflix (NFLX) has run commercials and ads on its streaming service.
Wall Street analysts have a consensus buy rating on Netflix's (NFLX) stock, while Seeking Alpha authors give the company's shares a hold rating. Seeking Alpha's Quant system, which regularly outperforms the stock market, also has a hold rating on Netflix's shares.