Netflix (NASDAQ: NFLX) stock is an obvious, screaming buy.
That's according to investment bank Jefferies Financial Group (NYSE: JEF), which initiated its coverage of the popular streaming video giant on Thursday. Analyst Alex Giaimo placed a $520 per-share price target on the stock, which if met would represent an upside of 14% on the current share price. Giaimo's recommendation on the stock is a buy.
Image source: Netflix.
The crux of the Jefferies prognosticator's argument is that Netflix has a very large and still untapped potential customer base. According to Giaimo, the company's "addressable market is vastly underappreciated, providing significant runway for continued double-digit subscriber growth."
According to Giaimo's estimates, this market is to rise to over 850 million people. Broadband and mobile-device-only customers will largely be responsible for this growth. In terms of geography, many new subscribers will come from abroad. Giaimo is estimating that Netflix's international penetration will rise to 28% by 2023, up significantly from the current level of 18%.
Netflix, already one of the most popular entertainment stocks even before the SARS-CoV-2 coronavirus outbreak, has been a bona fide star lately. "Stay at home" mandates aimed at mitigating the spread of the coronavirus have seen a sharp rise in consumer interest for streaming services. Since the beginning of this year, the company's shares have risen by over 40%, while the S&P 500 index has slumped by 11%.
Friday was a positive day for Netflix stock. Similar to the year-to-date dynamic, it outpaced the gains of the top stock market indexes (not to mention many other consumer goods titles) by rising nearly 2.8% on the day.
10 stocks we like better than Netflix
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Netflix wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of April 16, 2020
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Jefferies Financial Group Inc. and Netflix. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
