Evercore ISI analysts reiterated an Outperform rating on Netflix (NASDAQ:NFLX) and raised the 12-month target price from $600 to $640 on Wednesday.
The new price objective implies roughly a 5% upside from the last closing price. The stock rose 1.3% in premarket trading.
The broker’s upward revision comes after it conducted a quarterly U.S. and annual Japan Netflix survey, with a total of 1,300 and 1,600 respondents, respectively.
“At a high level, we see largely neutral Core Netflix trends in the U.S. and modestly positive trends in Japan,” analysts said in the note.
They highlighted that NFLX’s market penetration in the U.S. has been relatively stable at 59% over the past year, maintaining its position as the top provider in paid premium Video On Demand (VOD) services, leading by 15% ahead of Hulu.
Customer satisfaction with Netflix saw a significant increase, rising to 56%. However, the intention to cancel subscriptions, also called churn intent, experienced an increase as well, reaching 40%.
Japan, on the other hand, showed relatively stable satisfaction rates of 68% and notable improvements in churn intent, with a fourth consecutive annual decline to 23%. Market penetration, however, remains stagnant at 14%, Evercore said.
Meanwhile, Subscription- and Advertising-based Video on Demand (SAVOD) “continues to drive gross adds incrementality for Netflix, and is also increasingly becoming an anti-churn lever in the U.S,” analysts wrote.
Further, analysts highlighted that paid sharing continues to show promise, especially in international markets such as Japan.
Also, they note the emerging trend of mobile-only Netflix users beginning to experience enforcement of paid sharing policies.
This trend “may provide an additional, and not insignificant sub adds tailwind over the next few quarters,” said Evercore’s team.