PhillipCapital likes Netflix, the video streaming service, giving it a target price of US$585 ($794.70) as the shares currently trade at US$505.87.

The brokerage has also given its entry price and stop loss recommendations at US$458.40 and US$390.37.

In an unrated report dated Oct 9, PhillipCapital analysts Yeap Jun Rong and Chua Wei Ren say that the company is “standing firm against [its] competition”.

Yeap and Chua also highlighted several positives on the counter including its international expansion to boost subscriber base. Since FY2014, the number of Netflix’s paid subscribers in Europe, Middle East and Africa (EMAE), Asia Pacific, and Latin America have grown by a five-year compound annual growth rate (CAGR) of 42.7%, compared to the 12.4% in the US and Canada.

“This strength was able to more than offset lower ARPUs of 30-70% in international regions. 4Q2019 revenue from international regions overtook that of US and Canada. By 2Q2020, international regions accounted for 53.3% of its revenue,” say Yeap and Chua.

The figures, according to Yeap and Chua, testify to the success of Netflix’s targeted strategy of streaming regional content and partnering regional channel providers.

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“We believe its strategy of lower-priced mobile-only subscriptions will continue to attract subscribers in APAC, which is currently its highest-growth market. This strategy worked in India and we foresee similar success in replication in other APAC countries with similar characteristics such as lower income and higher mobile-streaming usage,” they add.

Netflix’s large pipeline of content also puts it in a good position to retain and drive subscriptions.

For 2020 alone, the company is releasing 459 brand-new content, where 98% are exclusive to its brand.

The company says it anticipates that the total number of its originals for 2021 will be higher than 2020.

“This suggests that delays in content production caused by Covid-19 will be short-lived and should have minimal impact on its churn rate,” say Yeap and Chua.

Netflix’s huge lead over subscription video on demand (SVoD) also makes the stock one to watch. With 62% more subscribers than China’s iQiyi – the second-largest streaming player in the world – Netflix is way ahead of the competition in a market that is not a zero-sum game, say the analysts.

“By investing in localised and differentiated content, Netflix has been adding subscribers despite new entrants such as Apple TV and Disney+. This can be attributed to its large international presence which allows it to form partnerships with channel providers for content distribution,” they add.

Shares in Netflix closed US$531.79 on Oct 8.