Netflix shares to open higher after strong customer additions forecast

Thu Jan 23, 2014 9:14am EST

The Netflix logo is is shown on an ipad in Encinitas, California, April 19, 2013. REUTERS/Mike Blake

The Netflix logo is is shown on an ipad in Encinitas, California, April 19, 2013.

Credit: Reuters/Mike Blake

(Reuters) - Netflix Inc's shares were set to open 18 percent higher on Thursday, after the world's largest video streaming company said it expected customer additions in the U.S. to remain strong, prompting at least six brokerages to raise their price targets on the stock by as much as $55.

Netflix said on Wednesday it added more than 2.3 million U.S. customers in the fourth quarter and expected to add more subscribers in the first quarter of 2014 than in the year-ago period.

"Netflix remains on track to significantly disrupt the linear TV market through content differentiation, a compelling consumer proposition, and strong subscriber growth," J.P. Morgan Securities analyst Doug Anmuth wrote in a note to investors.

He raised his price target on the stock by $40 to $500.

Netflix's shares closed at $333.73 on Wednesday.

"We see improving content and consumer acceptance driving a surge in profitable domestic streaming growth," FBR Capital Markets & Co analyst Barton Crockett wrote in a note.

"House of Cards," one of Netflix's successful original shows, had four nominations at the recent Golden Globes, and won a Globe for best actress in a drama.

Analysts also said Netflix's estimate of an 11 percent growth in net customer additions in the first quarter could be conservative, given that the second season of "House of Cards" is set to start in February.

Netflix also said that it was testing variations of its $8 monthly charge plan "at various price points."

Strong early acceptance in key international markets, including the U.K. and Nordics, indicates Netflix would be able to replicate its U.S. success, analyst Crockett added.

Netflix signed up 1.74 million new customers in foreign markets in the fourth quarter, bringing its worldwide total to 44.4 million.

The company's shares have nearly quadrupled in value in 2013, making it one of top gainers.

(Reporting by Sruthi Ramakrishnan in Bangalore,)

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Comments (1)
DebbyBycroft wrote:
It would be interesting to know what percentage of their customers have replaced their heavily overpriced satellite/cable service with Netflix service. I am among them for over a year now, as well as many people I know. It’s much more cost effective to have Netflix and, if you really want to follow a show that is currently airing or see a newer movie, pay-per-view them through the internet or a smart phone.

Jan 22, 2014 8:28pm EST  --  Report as abuse
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