Shares of Netflix (NASDAQ:NFLX) surged more than 4% on Monday after the stock received two price target increases from key analysts, just one day after the video streaming company brought home its first major Oscar.
Netflix is no stranger to critical acclaim and has notched several major nominations and awards over the past few years, but the company’s “Best Documentary Feature” win for Icarus, a profile of the recent Russian sports doping scandal, was its first Academy Award for a feature-length film.
While Netflix’s new golden statue probably did not move shares higher, the award underscores the success of its original content plan—a strategy that analysts have become considerably bullish on.
“Increasingly building out its global production muscle and focusing on content that travels internationally, Netflix has emerged as a content powerhouse that is actively building a global moat,” wrote UBC analyst Eric Sheridan in a note Monday.
UBS raised its price target on Netflix to $345 from $290, implying a 15% upside from Friday’s close. The firm also mentioned that Netflix’s content is generating a similar level of interest as its most-popular competition, including Time Warner’s (NYSE:TWX) HBO. Sheridan wrote that the second season of Stanger Things garnered more search activity than Game of Thrones in the U.S.
Meanwhile, analysts from Macquarie pointed to the rise of 4K streaming as a potential growth catalyst for Netflix.
“Netflix is both a driver and a beneficiary of the 4K TV trend,” wrote Macquarie’s Tim Nollen on Monday. “Old TV's reach end of life and new TV viewers enter the marketplace, and while these TV buyers may already have Netflix, the availability of higher definition streams for existing Netflix content means re-tiering has a natural driver.”
Netflix currently offers a $10 per month “Standard” HD subscription plan, but the platform’s Ultra HD plan geared toward 4K TVs costs $14 per month. As more users move to 4K and upgrade their plans, Netflix will bring in additional revenue.
About 12% of North American TVs were 4K compatible in 2016, according to Macquarie research. The firm expects that number to increase to 50% by 2020.
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