Netflix (NASDAQ:NFLX) is on its way to new all-time highs.

So says Jefferies analyst Alex Giaimo. Giaimo reiterated his buy rating and $520 target price for Netflix's stock on May 22. His new target implies potential gains of approximately 25% for investors, based on Netflix's current price of $417.

A sculpture of a bull.

Jefferies analyst Alex Giaimo is bullish on Netflix stock. Image source: Getty Image.

Giaimo says Netflix will benefit from a coronavirus-driven acceleration in the shift away from traditional TV toward over-the-top (OTT) streaming options, which are delivered directly to users via the internet.

"Linear competition is hurting, and the lack of sports is resulting in significant advertising pressure," Giaimo said. "The media paradigm has shifted."

Moreover, Giaimo says Netflix is using a "land-grab" strategy to expand its global streaming empire. It's spending heavily on content to acquire new subscribers and fend away new competitors, such as Disney's Disney+, Apple's Apple TV+, and AT&T's new HBO Max streaming service.

However, Giaimo believes Netflix will eventually be able to pull back on its spending, thereby boosting its profit margins and free cash flow generation. Thus, Giaimo argues the bears fail to appreciate Netflix's true earnings power potential.

All told, Giaimo expects Netflix's share price to remain volatile in the near-term, but to head sharply higher over time. "Near-term choppiness is expected, but we advise buying dips and owning shares long term," he said.