Evercore ISI analysts reaffirmed their positive outlook on Netflix (NASDAQ:NFLX) and increased the 12-month target price to $640, up from $600, on Wednesday.
This upward revision suggests a potential 5% upside from the recent closing price, with the stock showing a 1.3% increase in premarket trading.
The decision to raise the target price followed a comprehensive quarterly survey in the U.S. and an annual survey in Japan, gathering insights from 1,300 and 1,600 respondents, respectively.
According to analysts, the U.S. survey revealed stable market penetration for Netflix, maintaining a 59% share in the paid premium Video On Demand (VOD) sector, with a notable lead of 15% over Hulu. Customer satisfaction increased to 56%, but churn intent also rose to 40%.
In Japan, satisfaction rates remained steady at 68%, with a significant decline in churn intent to 23% over the past year. However, market penetration stagnated at 14%.
Analysts highlighted the positive impact of Subscription- and Advertising-based Video on Demand (SAVOD) on Netflix’s subscriber growth, particularly in the U.S., where it serves as an anti-churn mechanism.
Moreover, paid sharing, especially prevalent in international markets like Japan, continues to show promise, contributing to subscriber growth.
An emerging trend observed is the enforcement of paid sharing policies among mobile-only Netflix users, potentially driving additional subscriber growth in the coming quarters.
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