If the signals for the TV industry are increasingly cloudy, Netflix (NFLX) appears to be streaming a crystal-clear picture.
The video-streaming company added 4.88 million subscribers in the first quarter, topping Netflix's own forecast of roughly 4 million new customers. Cheered, investors on Thursday sent its shares up more than 14 percent to an all-time high of $546.80.
And some Netflix watchers think its market value could climb higher still -- much higher. FBR & Co. analyst Barton Crockett said in a research report on Thursday that the stock could reach $900 a share, a roughly 65 percent jump from its current price.
His thinking? American consumers "love the service more than TV," according to a consumer survey conducted by his firm and ClearVoice Research. That's going to help swell the ranks of Netflix subscribers not only domestically but internationally, given the service's push into new countries such as Japan.
"In this outpouring of affection, we see Netflix as very likely to move towards 180 million global subscribers by 2020 (over 60 million in the U.S.)," Crockett wrote. "Netflix users value the service more than multichannel pay TV: 57 percent of the nearly 800 Netflix users queried said that, if forced to choose, they would keep Netflix over traditional pay TV."
The survey of more than 2,000 U.S. consumers also found that almost half spent more time watching Netflix than traditional television. Viewer hours devoted to Netflix are also swelling, with the average global subscriber watching Netflix 1.9 hours per day, or a jump of almost one-third from a year earlier.
Netflix's decision to invest in original content such as "House of Cards" is paying dividends, helping to secure consumer loyalty, the report added.
"Netflix plans 320 hours this year, doubling to 640 in later periods -- a larger tally and ramp than any other major video service," Crockett wrote.
What's good news for Netflix may represent harder times for the traditional TV industry, which is feeling the effects of "cord-cutters," or people who forego pay-TV subscriptions in favor of streaming sites such as Hulu and Netflix. Even a mainstay of cable television, HBO, has recently created an option for people who prefer to stream video on their mobile devices, with the $14.99 per month HBO Now. (CBS, the owner of CBS MoneyWatch, offers CBS All Access for $5.99 per month, as well as its traditional advertising-based network.)
Major TV and movie figures are certainly keeping tabs on the burgeoning audience for online video programming, with comedian Jerry Seinfeld recently telling an audience at an event for Sony's streaming service Crackle, "TV is over." Seinfeld was explaining why he opted to put his series "Comedians in Cars Getting Coffee" on Crackle, rather than a TV network.
"There's nothing different about what we're doing than what anyone else is doing on any media anywhere," said Seinfeld, whose long-running series "Seinfeld" was one of television's biggest hits in the 1990s. "TV networks are worried that you'll figure out TV is over and there's nothing special about it."
Crockett's research found that 40 percent of U.S. consumers who have Netflix prefer it over traditional TV, which he thinks suggests that the streaming service has both the price leverage and the opportunity for more growth. The company could also eventually expand in China, he added.
"When Netflix enters this market, we believe, in the first few years, it will move towards a market penetration and margin level close to that in the U.S., driving sharp earnings growth, after initial investments," he said in the research note.
There are some risks, of course. Netflix faces fierce competition from rivals such as Amazon Prime and Hulu, while growth could slow if Netflix taps out on possible new subscribers. There's also the issue of the company's cash burn, given that it's investing in expanding original content, which will drive "negative free cash flow this year and next," Crockett wrote.