Pivotal Research Group raised its price target for Netflix (NASDAQ:NFLX) to a new Street high of $765 from $700 per share in a note Friday, maintaining a Buy rating on the stock.
The firm said its new year-end 2024 target is driven primarily by a combo of higher 2024 and beyond subscriber/ARPU forecasts.
For 2024, Pivotal raised its full-year net new paying subscriber forecast to +19.5 million from +18.2 million previously. By year-end 2030, they are now assuming 356 million total paying subscribers vs. 347 million previously. The firm made relatively modest changes in ARPU for 2024 and beyond and now assume $14.37 in average ARPU per paying subscriber by 2030 up from $14.15 (driven entirely be developed markets).
"These higher forecasts are a result of continued solid momentum in the core business and what we view as the attractive absolute and relative value that NFLX service is offering to consumers (leading to what we view as material medium/long term upside from current ARPU levels)," said analysts at Pivotal.
"Recall we value NFLX using a DCF methodology with an 8% discount rate and a 17X '30 terminal year EBITDA multiple for the world's dominant pay video entertainment platform."