Morgan Keegan analyst Justin Patterson this morning launched coverage of both Netflix (NFLX) and OpenTable (OPEN) with Outperform ratings.
- Netflix: He says the combination of attractively priced plans, streaming video content and struggling competitors translates into rapid subscriber growth; Patterson contends that given the growth potential, the stock could hit $120-$130. He thinks a P/E ratio of 33-35x is warranted “given momentum in sub growth, cost advantages from streaming, further share gains and management’s history of returning capital to shareholders through share repurchases.”
- OpenTable: Patterson contends the company’s electronic reservation software and growing market share “have created deep competitive moats, and should enable [the company] to generate significant top-line growth for the next five years as online restaurant reservations grow.” He puts fair value for the stock at $50 a share.
In this morning’s trading:
- NFLX is down 21 cents, or 0.2%, to $106.14.
- OPEN is up 75 cents, or 1.7%, to $43.95.
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