Analyst firm Cowen just issued a preview of Netflix (NFLX -0.68%) earnings for the fourth quarter of 2020. Cowen analyst John Blackledge found a lot to like in his Netflix research and ended up boosting his one-year target price for the stock.

The analyst's findings

Blackledge reiterated his outperform rating on Netflix shares, which means he expects the stock to beat the market in the short term. His target price for the stock was boosted from $625 to $650 per share, based on a rosier analysis of Netflix's long-term cash flows. That's 30% above Wednesday's closing price.

Cowen performed an in-house survey of 2,500 American consumers. Fifty-seven percent of respondents said they would be willing to pay more for Netflix video-streaming services, up from 47% in the third-quarter survey. Given that Netflix also implemented its largest-ever price increase for domestic subscribers during the fourth quarter, Blackledge said that the survey suggests strong pricing power in the company's largest and most mature market.

"We think increased pricing power leaves [Netflix] well positioned into '21 & beyond, as they ramp Originals & further increase value prop," the research note said. Cowen also views the survey results as a positive sign for subscriber additions in the fourth quarter.

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Cowen's investment thesis

Cowen expects Netflix to deliver annual sales growth near 11% over the next 10 years alongside widening profit margins. By 2031, Blackledge estimates that Netflix should have approximately 96 million North American subscribers and 413 million accounts worldwide, with "very high incremental margins" of at least 80% thanks to economies of scale.

Blackledge has a long history of accurate Netflix calls. Twenty-seven of his 38 ratings of this stock have been profitable, according to data from Tipranks. The analyst has been consistently bullish on the stock since early 2015. Netflix shares that were bought and held since the first buy rating in this long streak are showing a return of 693% today.