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Investing.com — Wells Fargo analyst Steven Cahall told investors in a note Monday that Netflix Inc’s (NASDAQ:NFLX) long-term net adds are more likely 20 million.
According to TheFly, the analyst cited a deep dive he did into global connectivity and subscriber penetration. Cahall was quoted by the stock market news site as saying net adds are “more likely 20m or better than 15m or worse.”
He added that if correct, Netflix shares are floored, and earnings per share estimates will trend higher.
Cahall explained that his analysis will take time to take shape, and the note is a “foundation for patient investors.”
Pointing back to connectivity, the analyst says data suggests there will be 110 million or more new broadband and mobile phone connections per year on average over the coming years, and at the current valuation, he believes Netflix shares are pricing in something nearer to his bear case.
However, he is “extremely confident” that the average net adds will exceed 15 million in the medium term.
Cahall has an Overweight rating and a $600 price target on Netflix shares, which are down 1.8% Monday.
