Analysts back Netflix international expansion plans

Analysts have backed Netflix’s expansive launch strategy and stated its recent original programming deal with The Walt Disney Company is a “major positive”.

A report from investment research firm Zachs predicted Netflix’s fast stock growth would continue into next year, with full year revenue for 2014 estimated to break the US$5 billion (€3.7 billion) barrier for the first time.

Its earning per share is also expected to rocket from US$1.74 this year to US$4.20 in twelve months’ time and therefore Zachs upgraded its investor recommendation from ‘neutral’ to ‘outperform’.

Furthermore, the report forecasted that an increase in spend on original programming next year would be “incrementally beneficial for the company, helping it to add new subscribers and retain the older ones, going forward”.

The deal that saw Netflix order four series based on Marvel Universe characters and a related miniseries from Marvel Entertainment owner Disney was singled out a key indicator of the weight being placed on originals.

Meanwhile, reports this week revealed US-based Netflix has sent reps to Europe to explore launches in France, Germany and Belgium. It has already gone live in the UK, Ireland, Canada, the Netherlands and Latin America and Zachs backed this strategy too.

“We believe that international expansion is a solid strategy to counter any subscriber loss in the domestic market,” the report stated.

However, it did warn earnings from international market business would remain under press in the near future as the company continues to strike major local programming agreements and noted that in the US, the likes of Amazon and Time Warner were offering increasingly strong on-demand alternatives.