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The team at MoffettNathanson upgraded Netflix (NFLX) to a Buy rating while raising its price target to $1,100 per share, declaring that the company "has won the streaming wars" in an analyst note.
MoffettNathanson senior analyst Robert Fishman — who wrote the note and declared Netflix the streaming victor — joins Madison Mills and ProShares global investment strategist Simeon Hyman for a conversation about the streaming platform's subscriber growth and ability to broadly source out content.
To watch more expert insights and analysis on the latest market action, check out more Catalysts here.
Netflix today upgraded from neutral to buy at Moffett Nathanson. Here now we got Robert Fishman, he's Moffett Nathanson's senior analyst. Thank you so much for being here, Robert. You raised your price target to 1100 for Netflix. Talk to me about your bull case.
Yeah, the bull case is that the more we dug in on this company and refreshed our view, the more confident we got with the growth outlook. And that's going to come from a few different ways. The core business is still really firing on all cylinders. Um the advertising business and the unlock that happened with the advertising tier is still in the very early stages and margins because of all of that are going to continue to rise. Um and we don't really see any sort of cap in sight.
And it's interesting you mentioned that they are the clear winners of the streaming war. Talk to me about how you came to that decision. What was it about Netflix that made you so determined to say that they were the clear winners against competitors?
Yeah, I mean, I think that the reality of that has been clear for probably a couple of years already and the more that they grow um well above the the peers and where the other um competitors are are trying to strive to get to, um the the more that they have a lead. And we see that with the engagements. We we've seen um Netflix engagement just continue to be very strong not just in the US, but around the world. And that's the other piece that that really puts them well ahead of all of their peers. The international subscriber base is just unparalleled um compared to any of the other companies. So when you put that all that together, they clearly have won as as I think most people know and the lead that they have is just continuing to expand.
Robert Simeonman, how are you? Uh I I I'm the old guy in the room and I remember a book in the late 90s called the Innovator's Dilemma. And what it said was that incumbents actually have a huge advantage whenever there's disruptive technology because the incumbents just can't get their arms around it. Their cash cows are too valuable. This seems like we're living in the upside down that it's incredibly hard for any new entrance to get into many of these markets, whether it's Netflix or other parts of the technology space.
Yeah, I mean, I think Netflix clearly has proven that it has a significant first mover advantage in this streaming world. Um and I guess as as part of what what you just said, the traditional media companies uh have been trying to protect their linear cash flows for for many years, but I think there's finally a reality that they can't protect that anymore because of the disruption happening with cord cutting and advertising shifting to online and and connected TVs. So Netflix is in a really strong position to capitalize on all of that and they actually get the benefit of getting content from the traditional guys looking to sell and license their contents to stronger players.