Bob Peck On Netflix: Opportunity Is There, But Staying On The Sidelines
Shares of Netflix, Inc. (NASDAQ: NFLX) gapped up at the opening on Wednesday to new all-time highs on back of a host of positive news, including shareholder’s approval of the company’s stock split, a partnership with Marriott International Inc (NASDAQ: MAR) and UBS Group AG (USA) (NYSE: UBS) upping its price target on the company to $722 from $600.
Robert "Bob" Peck, SunTrust Robinson Humphrey Internet analyst, was on CNBC recently to discuss the company's valuation and stock split.
Big Believers
"It’s quite astounding and, quite honestly, it has caught us by surprise," Peck said. "So, we are big believers in the opportunity here."
He elaborated, "They are rolling out to more and more international markets – just announced Japan, Spain, Italy – and there’s a whole host of new markets to come. Rolling out more and more content that you are seeing, successive [accounts] been there…Tremendous opportunity as they disrupt linear TV.”
Little Expensive
He continued, “However, the reason why we have been on the sidelines, it’s currently trading around 100 times EBITDA or so, and so we look for our clients to get in a better multiple to growth ratios. Even if you look out a little further, say maybe oh seventeen, maybe a more normalized EBITDA number. It’s still trading 35 times EBITDA, so, a little expensive.”
Can Outperform Post Stock Split
On the company’s massive stock split, Peck said, “It was a very big number and we are trying to put it into context there. What we have done is, we have looked back historically to see what happens to a company post-share splits and how they outperform versus their controlled group. And if you look at some of these previous studies, they typically outperform about 8 percent in a given year and then more mid-teens over 2–3 years.”
Image Credit: "Netflix headquarters" by Coolcaesar at en.wikipedia. Licensed under CC BY-SA 3.0 via Wikimedia Commons
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Posted-In: Bob Peck CNBC Robert Peck SunTrust Robinson HumphreyAnalyst Color Media
