Netflix adequately valued, despite improving U.S. subscriber trends – Barclays

Barclays analysts raised the firm’s price target on Netflix (NASDAQ:) to $375 from $250 in a note Wednesday, maintaining an Equal-Weight rating on the stock.

The analysts told investors that while Netflix is structurally the best positioned to benefit from the engagement shift toward streaming, its “present valuation seems to more than adequately reflect potential upside from near-term growth optimization tools like paid sharing and advertising.”

“Over the past month, Netflix equity is up ~28% (vs SPX up ~6%). This has been driven by subscriber growth concerns fading as churn post the rollout of paid sharing/password sharing shutdowns appears to have been surprisingly low, especially in the US, based on recent third-party data as well as our proprietary Barclays card data,” wrote analysts.

Analysts noted that Netflix trends in May and early June in the U.S. appear to have improved despite the rollout of paid sharing. They added that they actually “appear to be trending better after the rollout, despite the significant associated price increase.”

“This has resulted in subscriber growth expectations going up not just for the year but for future periods as well,” the analysts added, although they believe paid sharing alone is unlikely to help the company get anywhere close to its historical rates.