Netflix at $500 a share gains steam

new york — Wall Street’s starting to embrace the idea that Netflix will rally to $500 a share.

Credit Suisse analyst Douglas Mitchelson assumed coverage of the stock with an outperform rating and a price target of $500, which implies upside of about 20 percent to the last close. He’s the third analyst out of 45 that sees Netflix breaching the $500 mark, according to Bloomberg.

Mitchelson cited a favourable content slate and optimism over net ads. He said he sees the company “enjoying unchallenged leadership and disproportionate scale benefit” in the global streaming subscription video on demand marketplace.

He added that while valuation “certainly looks very expensive on any traditional measure, we believe a number of visible factors suggest the opposite is true and Netflix is actually quite reasonably priced”. The Credit Suisse note was part of a broader assumption of coverage for 14 telecom and media sectors.

Mitchelson said that his most out-of-consensus calls included outperform ratings on TwentyFirst Century Fox (M&A bids seen moving higher) and Sirius XM Holdings (no negative catalysts and “powerful” buyback to drive valuation higher); and underperforms on AT&T (challenged growth and returns below cost of capital) and Dish Network (doesn’t expect a sale any time soon).