Call of the week: Netflix shares could soar 68%

Yahoo Finance’s call of the week is MKM Partners’ bullish note on Netflix (NFLX). Analyst Rob Sanderson maintained a buy rating while raising his 12-month price target on the stock Thursday to $195 per share.

Sanderson’s current price target is 22.5x his 2021 EPS estimate, and implies a $273 stock price in 2020. That means he thinks Netflix shares could soar 68% from Friday’s opening price of $162.84 a share.

Why is Sanderson bullish on the streaming giant? He thinks it will continue to capitalize on the growing number of cord cutters nationwide.

After Netflix reported that its total U.S. subscribers reached 50.85 million last quarter, he thinks the outer boundary of MKM Partners’ long-term view of 60 million to 90 million U.S. subscribers is “more plausible” than most people think.

Sanderson wrote, “We think that NFLX will continue to reinforce its broad market appeal and expand its content budget as it scales users and eventually achieves the high-end of its U.S. adoption target. We think this mass appeal will also apply globally into hundreds of millions of homes.”

Sanderson wasn’t the only bullish call on Netflix this week. Piper Jaffray also upped its price target on the stock to $190, the second highest on the street, while maintaining an overweight rating. Analyst Michael Olson warns the street may be underestimating Netflix’s future growth overseas.

Netflix’s stock is up more than 30% since January 1.