When it comes to successful runs, Netflix (NASDAQ:NFLX) continues to be the little engine that could. The stock has more than doubled over the past two years, even in the wake of recent market declines. Of the 41 analysts covering the streaming pioneer, only one permabear recommends selling. Some analysts are more bullish than others, however, believing that Netflix has much more gas in the tank.
In a research note, RBC Capital analyst Mark Mahaney cites recent surveys that gauge international penetration and customer satisfaction to update the firm's long thesis and bolster claims that Netflix could rise to between $475 and $750 per share within the coming three years. The high end of that range would see Netflix more than double from its current level north of $340.
Let's look at what the survey results have to say and what it means for investors.
International penetration is soaring
One of the key themes of the research is that international customers continue to adopt Netflix at an impressive rate. In a survey of more than 2,000 consumers in France and Germany, 50% of respondents in France and 49% in Germany -- both record highs -- reported using Netflix to watch movies and television programs. While that's considerably less than the 63% in the U.S. who subscribe to the service, it's up from just 37% in France and 35% in Germany when the same survey was conducted in May 2018. This is an impressive feat, considering Netflix didn't launch in either of the two countries until 2014.
The results confirm similar research that was conducted in Japan in March 2019. Of more than 2,000 people surveyed, a record-high 11% of Japanese consumers watch Netflix, more than double the 5% level from last year's results.
Robust customer satisfaction
Another key finding of the survey was that customers continue to be extremely happy with the quality of Netflix's content. An amazing 90% of French viewers and 89% of German customers said they were either "extremely satisfied" or "very satisfied" with the service. This is consistent with the viewer satisfaction trends from the prior-year survey.
Japanese viewers were similarly happy with the programming. The survey conducted in March found that 69% of respondents were "extremely satisfied" or "very satisfied," up from 63% in the year-ago questionnaire.
Strong content slate
Netflix subscribers stick around for the content, and the company has a particularly robust slate of programming on deck for the remainder of the year. Fan favorites like Stranger Things (season 3), Orange is the New Black (season 7), and 13 Reasons Why (season 3) are all scheduled to debut in the second half of 2019.
These hit series will be joined by several blockbuster films, including the long-awaited Martin Scorsese-helmed The Irishman and Six Underground, directed by Michael Bay. "We view the upcoming content slate as a key factor behind Netflix likely accelerating its subscriber base in [fiscal 2019]," Mahaney writes.
A peek into the future
Netflix currently boasts a worldwide subscriber base of 149 million, and the company has consistently increased its customer count by more than 25% year over year -- largely on the strength of its growth in international markets.
Mahaney believes that within five years, this will result in global subscribers of 300 million -- more than double its current count. He estimates operating margins of between 25% and 30% (compared to 10% now) and average revenue per user (ARPU) of about $13 (the price of its most popular plan), so it's easy to see how Netflix stock could be worth considerably more than it is today -- even if the numbers entail some guesswork.