Netflix's accelerated global rollout catches Wall Street off guard

Wed Jan 21, 2015 10:09am EST
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By Abhirup Roy and Fareha Khan

(Reuters) - Netflix Inc's faster-than-expected rollout in overseas markets took most analysts by surprise, setting off a flurry of price target increases on the stock.

Shares of the video streaming service, which reported stronger-than-expected quarterly results, rose as much as 19 percent in early trading on Wednesday.

The stock has been under pressure in recent months on fears of increased competition from Time Warner Inc's HBO, Inc and Hulu, as well as on-demand offerings from pay TV providers.

At least 13 analysts raised their price targets on the stock, after the company said it would complete its expansion into around 200 countries within two years.

"In our view, this is aggressive but possible, with the rapid proliferation of connected devices," BMO Capital Markets analyst Edward Williams wrote in a note.

"Perhaps more importantly, this signals the timing of when the heavy investment phase could end."

Some analysts said the accelerated global rollout would boost the company's profits in 2017 and beyond.

J.P. Morgan Securities was the most bullish, raising its price target by $61 to $511.   Continued...

The Netflix logo is shown in this illustration photograph in Encinitas, California October 14, 2014. REUTERS/Mike Blake