Why Credit Suisse Sees NFLX Climbing to $470

Shares of Netflix Inc. (NFLX), already having more than doubled in 2018, are set to rally another near 25% over 12 months, according to one team of bulls on the Street. 

In a note entitled, "Will Stranger Things Wear The Crown in 2019, Or Will A New Hit Have Nailed It?" analysts at Credit Suisse reiterated an outperform rating on shares of the on-demand entertainment streaming platform, citing a "meaningfully stronger" content slate for 2019. 

"This bodes well for 2019 subscriber growth as scaling quality content should benefit both marketing and churn," wrote Credit Suisse analyst Doug Mitchelson, who has a price target of $470 on Netflix stock. Credit Suisse explained that it tracks content since it is central to many of the key debates surrounding Netflix, including subscriber growth, competitor positioning, pricing power, hit rate, content cost, and need to and ability to access to third party content. As rival platforms such as Walt Disney Co.'s (DIS) upcoming streaming service, Hulu, Amazon.com Inc. (AMZN) and Alphabet Inc.'s (GOOGL) YouTube double down on content to knock Netflix from its leadership position, Netflix is slated to spend a whopping $13 billion on content in 2018. 

(For more, see also: Netflix to Spend $13B on Original Content in 2018.)

The analyst highlighted potential blockbuster hits including the Martin Scorsese-Al Pacino gangster epic "The Irishman", and director Michael Bay's action film "Six Underground"; 2019 series include The Witcher and the beginning of Shonda Rhimes' contributions, as well as many others detailed in the firm's content tracker. 

"The service is not solely hit-driven; the slate is deeper with more dramas, movies and international content, driven by more internally produced content and another step-function increase in original content spending (by an estimated $974m, or 37% Y/Y, to a full 40% of content amortization in 2019)," added Mitchelson. 

He expects Netflix to get a boost in 2019 easy comparison to the year prior, writing that in 2018, the Los Gatos, Calif.-based company did not have popular shows like "Stranger Things" or "The Crown", which are both returning next year. Mitchelson indicated that while it is difficult to predict a new hit, 2019 should see an increased number of new releases, or more "swings at the plate."

Shares of Netflix, up nearly 3% on Monday morning at $384.98, have returned 101% year-to-date (YTD) compared to a 9.7% gain for the broader S&P 500  index. 

(For more, see also: Why Netflix Could Rally 30%.)