Netflix still has a ton of room to grow - even with Disney in the ring

REUTERS/Steve Marcus

• Netflix is facing increasing competition in the streaming video space.
• But one analyst thinks the company's growth is nowhere close to being done.
• Watch Netflix's stock price move in real time here.

Netflix used to be the only player in the streaming video space, but now everyone wants a piece of the pie, which has the majority of Wall Street analysts worried.

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The company added more than 5 million subscribers in the most recently reported quarter, bringing its total user base up to 112.8 million. Rob Sanderson, an analyst at MKM Partners, thinks that Netflix's growth will continue to skyrocket.

"Anecdotes from early markets suggest the fifth year is generally the peak year for additions," Sanderson wrote in a note to clients. "This would suggest that 75% of the international footprint is still 2-3 years from peak net adds."

Sanderson's view differs from the rest of Wall Street, who think that rising competition and media consolidation will be a big draw on Netflix's growth. Disney recently charged onto the scene with its acquisition of a streaming video technology company and parts of 21st Century Fox.

If it plays out like Sanderson says it will, Netflix will eventually have 90 million US and 300 million international subscribers. At an average of $12.50 of revenue per user, and a content budget of $25 billion, Sanderson says Netflix will eventually report earnings of $30 a share.

In fiscal year 2017, the company reported earnings of $1.25 per share, meaning Sanderson sees the company's earnings growing to 24 times their current level. Netflix would need to more than triple its current subscription base to reach those numbers.

"We continue to believe that NFLX has the most potential for market cap appreciation of the FANG stocks over the next several years," Sanderson wrote.

Sanderson has a 12-month price target of $245, which is 15% higher than the company's current price.

Netflix is up 5.72% this year.

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