Netflix Is Properly Valued Until Company's Execution In New Markets Is Proven

By Trey WilliamsMarketsMarketWatch Pulse

As it stands, Netflix Inc. is properly valued, according to analysts at Citi. The global streaming company had one of its best quarters to date on Wednesday, reaching an intraday high after posting domestic and international subscriber gains that were better than expected. Lead Citi analyst Mark May raised his 12-month price target on the stock to $145 from $120, which is nearly 5% above Thursday's closing price, but he maintained his neutral rating. "While we are positive on Netflix's long-term positioning and the growth of OTT video, we believe shares are pricing in the company's opportunities both in the U.S. and internationally," May wrote in a note to clients. For further outperformance, investors would need to ascribe "far more value" to the new international markets where Netflix has launched, where execution in unproven, according to May. Netflix shares are up more than 28% in the trailing 12-month period, outperforming the S&P 500 Index , which is up nearly 22% during the same time frame.

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