×

Netflix Stock Pops to Record High on Bullish Analyst Forecast for International Profits

Shares of Netflix streamed to record-high territory Thursday after a Wall Street analyst issued a report arguing that investors are underestimating the company’s prospects for international profitability.

Netflix’s stock, which historically has been fairly volatile, climbed 3.5%, to $163.28 as of 12:30 p.m. ET after trading as high as $163.84 per share earlier. With the jump, Netflix has a market cap of more than $70 billion.

UPDATE: Netflix shares closed Thursday at $163.05, up 3.4% for the day, an all-time high closing price.

In a note to clients Thursday, Piper Jaffray analyst Michael Olson raised his 12-month price target on Netflix shares 14.5%, from $166 to $190 per share. That’s because, according to Olson, consensus expectations for Netflix’s earnings per share are far too low for 2020 given his expectations for international operations to achieve penetration and margins comparable to its U.S. base.

“While Netflix currently has a limited content offering outside of the U.S. and has done less marketing in many of the recently entered countries, we believe that, by 2020, there is potential for market penetration higher than current estimates,” Olson wrote.

Netflix had 47.9 million international members at the end of the first quarter of 2017, more than doubling in two years. Given its current trajectory overseas, Olson opined, Wall Street’s $4.99 earnings per share consensus estimate for 2020 consensus for Netflix would be 100% too low.

During Q1 2017, Netflix’s international streaming contributed $43 million in operating profits. It was the first quarter of consolidated profit for the non-U.S. segment, as “more mature territories offset investments in newer markets,” Netflix said in its investor letter.

“Our forward guidance shows that we intend to continue to invest internationally, projecting a small loss for Q2,” the company added. Netflix forecast an operating loss of $28 million on $1.14 billion revenue for the overseas segment for the second quarter of 2017.

Popular on Variety

More Digital

  • Oculus Go Product Shot

    Former Oculus Head of Mobile VR Max Cohen Leaves Facebook

    Early Oculus staffer Max Cohen, who at one point led mobile product for the VR unit, has left Facebook this week, Variety has learned. Cohen’s departure is just the latest staff defection for Facebook’s VR team, which recently also lost its head of VR product, Oculus co-founder Nate Mitchell. A Facebook spokesperson declined to comment. [...]

  • YouTube logo

    YouTube Reportedly to Stop Targeting Ads in Videos for Children

    YouTube is finalizing a plan under which it would no longer serve targeted ads in videos that are popular with kids, Bloomberg reported, citing anonymous sources. The move is intended to appease U.S. regulators that have been investigating whether YouTube violated privacy laws that prohibit online services from collecting data on children, according to the [...]

  • Facebook

    Facebook Looking to Hire Journalists for Curated News Section

    Facebook is looking to assemble a small team of journalists to help curate a news tab within its app. The team of 10 media professionals will complement algorithmic curation, and highlight the top stories of the day, according to a New York Times report. “We are building a new surface for news that will give [...]

  • Best Podcasts: 14 Podcasts You Should

    14 Podcasts You Should Be Listening to

    Here are a few of the informative, funny, thrilling and downright addictive podcasts that deserve your listening attention. Read Variety’s cover story, a deep dive into the podcast revolution with Conan O’Brien, right here. CaliphateThe New York Times Rukmini Callimachi’s reporting about the Islamic State is harrowing boots-on-the-ground journalism at its finest. Conan O’Brien Needs [...]

  • Lee-Daniels-headshot

    Lee Daniels Entertainment Announces Diverse Creative Workshop

    Lee Daniels Entertainment and the online entertainment network Represent by OMV have launched a diversity-focused creative workshop to promote a diverse group of new writers. The workshop will be held from Sept. 25-28 in Los Angeles, with travel provided by American Airlines. Industry professionals will mentor aspiring creatives from underrepresented communities with workshops, meetings with [...]

More From Our Brands

Access exclusive content