A long-awaited crackdown on password sharing could push the stock of Netflix (NFLX 2.39%) to new all-time highs over the course of the coming year.

That's according to Bank of America Securities analyst Nat Schindler. On Friday, Schindler addressed reports that Netflix has begun to discourage password sharing. "We view any potential password crackdowns as tailwind and Netflix is in a strong position to continue price increases in 2021," Schindler wrote in a note to clients on Friday. 

Couple wearing wool socks huddled on the couch watching television or streaming video.

Image source: Getty Images.

Over the past week, Netflix began what it described as a test, warning some viewers about the practice. "If you don't live with the owner of this account, you need your own account to keep watching." Users have the option to verify their permission to use the account by receiving a code via email or text, but also were offered the choice to "verify later."

Schindler has a buy rating on Netflix and a price target of $680, with represents potential gains for investors of roughly 31% over the closing price on Friday of about $518.

CEO Reed Hastings previously explained the company's lax enforcement of the rules. "Password sharing is something you have to learn to live with, because there's so much legitimate password sharing," Hastings said, "like you sharing with your spouse, with your kids ... so there's no bright line, and we're doing fine as is." 

Will Netflix's stock price ultimately hit $680? The evidence suggests that Schindler's thinking is sound. Data suggests that as many as 33% of Netflix users share their password with at least one other person, according to Magid Research. That could amount to roughly 67 million of the company's 204 million users. At $14 per month for Netflix's most popular plan, that could amount to $11 billion per year.

Even if the company succeeds in bringing just some of those freeloaders into the fold, it could amount to billions of dollars in additional revenue.